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Anzo Lim

SPD’s Election May Affect the Euro Negatively

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Germans coalition government led by Chancellor Angela Merkel faces an unprecedented challenge after last weekend, when its major ally Social Democratic Party of Germany(SPD)replaced the Vice Chancellor and Finance Minister with 2 left-wing new party leaders in a leadership election. Both of them have shown strong disapproval of the coalition between SPD and Merkels conservative party, and their victory may place Germany at the crossroads of political uncertainties.

As the SPD will be holding its party conference in a few days to decide on many fundamental issues, German press worry that the coalition government faces significant challenges in the future. If the SPD withdraws from the coalition, Merkels CDU(Christian Democratic Union) wont be able to secure half of the parliament seats, which may lead to a minority government in Germany, or even trigger early elections.

From the long run, the result of SPD election last weekend may be a negative factor for the euro, and we remain cautious about euros market trend in the future.

EUR/USD daily pivot points: 1.1045--1.1065

S1 1.1021           R1 1.1108

S2 1.0968            R2 1.1142

Edited by Anzo Lim

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