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23 Sep 2013
European open: Triumph for Merkel, but any protracted negotiations could weigh on bunds
FXstreet.com (London) - Heading into the start of the week, Asian markets made some small advances, though Tokyo was closed for public holidays for the Autumn equinox.
China’s HSBC flash manufacturing PMI rose from 50.1 to 51.2 in September, beating consensus of 50.9 and hitting a six-month high. The report showed broad improvements across the board, with exports orders returning positive territory and better readings for output, new orders, and employment.
AUD/USD made some gains on the solid Chinese data, climbing to USD0.9429.
Merkel triumphant, but lost an ally
Angel Merkel scored a huge personal victory in the German elections in a stronger showing than expected. Merkel’s Christian Democratic Union (CDU) party fell just three seats short of that needed to achieve an outright majority in the Bundestag.
EUR/USD opened slightly higher on the news, but most of the gains were eaten away during the Asian session. The pair his a session high of USD1.3540.
But while Sunday’s German election results were seen as a resounding vindication of Merkel’s role as a Eurozone problem solver and crisis manager, her former coalition partners did not fare so well. The classical liberal Free Democrats (FDP) failed to secure the requisite 5 percent of the vote required to take seats in the German parliament for the first time in 50 years. As a result Merkel will now negotiate with another party to form a majority.
While the effects of protracted negotiation have been thus far talked down, talks may weigh on bunds, with Merkel’s likely coalition partners of choice being the he centre-left Social Democrat party (SPD) of Peer Steinbrueck, who scored just under 26 per cent of the vote.
Flash PMI – Germany up, France down
However, whomever Merkel selects to form a working coalition in the Bundestag, policies will likely continue unchanged at the European level, continuing with conditional bailouts of struggling periphery Eurozone economies and opposing mutualised debt in the form of Eurobonds.
Heading into the European session, we have flash PMIs for September. Momentum for macro data suggests that we will see a small increase in German manufacturing PMI, while France will continue to see declines, with a sharp contraction in new orders. France printed 48.9 for services PMI on August and any chance of an improvement on that is slim.
China’s HSBC flash manufacturing PMI rose from 50.1 to 51.2 in September, beating consensus of 50.9 and hitting a six-month high. The report showed broad improvements across the board, with exports orders returning positive territory and better readings for output, new orders, and employment.
AUD/USD made some gains on the solid Chinese data, climbing to USD0.9429.
Merkel triumphant, but lost an ally
Angel Merkel scored a huge personal victory in the German elections in a stronger showing than expected. Merkel’s Christian Democratic Union (CDU) party fell just three seats short of that needed to achieve an outright majority in the Bundestag.
EUR/USD opened slightly higher on the news, but most of the gains were eaten away during the Asian session. The pair his a session high of USD1.3540.
But while Sunday’s German election results were seen as a resounding vindication of Merkel’s role as a Eurozone problem solver and crisis manager, her former coalition partners did not fare so well. The classical liberal Free Democrats (FDP) failed to secure the requisite 5 percent of the vote required to take seats in the German parliament for the first time in 50 years. As a result Merkel will now negotiate with another party to form a majority.
While the effects of protracted negotiation have been thus far talked down, talks may weigh on bunds, with Merkel’s likely coalition partners of choice being the he centre-left Social Democrat party (SPD) of Peer Steinbrueck, who scored just under 26 per cent of the vote.
Flash PMI – Germany up, France down
However, whomever Merkel selects to form a working coalition in the Bundestag, policies will likely continue unchanged at the European level, continuing with conditional bailouts of struggling periphery Eurozone economies and opposing mutualised debt in the form of Eurobonds.
Heading into the European session, we have flash PMIs for September. Momentum for macro data suggests that we will see a small increase in German manufacturing PMI, while France will continue to see declines, with a sharp contraction in new orders. France printed 48.9 for services PMI on August and any chance of an improvement on that is slim.