The collapse of coalition talks in Germany is the big news driving the euro today
So far (read from the bottom up for chronological order):
- Merkel's 3 options now that coalition talks have collapsed
- Merkel will inform German President she has failed to form coalition government
- EUR/USD update - lower after German coalition talks break down
- FDP walks out of Germany coalition talks (this was the first breaking item early on Monday Asia time)
Comments now from NatWest Markets in Singapore:
- The news is negative for the euro
- Longer-term implications aren't clear yet
- Another election is now possible
- Expects German fiscal policy to remain tight while situation being resolved (and thus supporting continued loose monetary policy from the European Central Bank)
- Brings into question Merkel's ability to implement reform calls by the EU ... Merkel priority will be to shore up her domestic political support
- In the case of fresh election, EUR/USD likely to fall
- Likely down near bottom of its recent 1.15-1.20 range
