On Monday, European stocks and the euro and took a dip during early trading after coalition talks subsided in Germany, but then rebounded as investors moved their focus to rallying fundamentals.
Chancellor Angela Merkel stated her efforts to create a three-way coalition government had failed which drove Germany into a political crisis and pushed the largest economy in Europe closer to a new election. German stocks were up 0.1 percent at 1240 GMT, while the Euro STOXX 600 index was up 0.3 percent.
This was more blatant on the euro, the single currency was up on the day by 0900 GMT with more than 2 percent rally against the dollar over the past two weeks. Against the yen, the euro fell as much as 0.8 percent during Asian trading to a two-month low of 131.16 yen, but it was flat in London trade at 131.97 yen.
“The eurozone political story is an outlier at the moment in the G10 currency trading space. The German political news over the weekend is not a game changer in our view,” said Viraj Patel, a currency strategist. “The broader story still remains of a recovering euro zone with improving fundamentals.
According to the German central bank, the economy is driving into the end of this year due to the strong industrial activity and companies are having a hard time finding enough workers to meet demands.
Wall Street futures proposed that U.S. stocks were set to drop as well after the close of last week as investors considered the fate of the Republicans’ tax plan. The dollar continued to rank higher against the basket of major currencies and moved farther away from one-month lows achieved last week. Crude oil futures were lower as Brent crude dropped 1.2 percent while traders are hesitant ahead of the OPEC meeting next week.
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