Angela Merkel from Germany's ruling Christian Democrat Union suffered a spectacular, historic defeat in Hamburg's recent elections (which are the first of 7 state votes), not seen since World War 2. It has been made abundantly clear that the people of Germany will not stand for any more bailouts of the PIIGS countries, not that Merkel was leading the charge, but the German want no more involvement. The Social Democrats took in nearly half the vote and more then double Merkel's party, allowing them to set up a government of their own, no coalition needed.
This will certainly change the dynamics for the European periphery that has been the cause of concern regarding contagion. This should keep pressure on the E.U. as one of the main mechanisms in getting an alternative bailout vehicle in place, just had it's political autonomy "knee capped"
While the markets in the US are closed, the FX markets are open and here' a daily chart of the EUR/USD
Note the most recent bounce failed to make a higher high keeping the downtrend intact since the start of February. The downside may even be more vicious as these new development play out and are discounted against the euro's stability as plans that have been laid are likely to be scrapped by the influential Germans.
No comments:
Post a Comment