Forex Flash: How could German elections impact on Euro? - BTMU

FXstreet.com (Barcelona) - With German elections still a long way to go until they take place in September this year, “the financial markets are not yet fully focused on this key event but the general consensus at this early stage would appear to be leaning toward an outcome of either another CDU-FDP coalition, or potentially a grand coalition with the CDU-SPD like between 2005-2009,” the Bank of Tokyo-Mitsubishi UFJ points out.

“The crucial point though is that all the major political parties are pro-Europe,” the bank expands, “and hence with the likelihood of Merkel leading some form of coalition government after the election, we do not expect a major shift in policy in the euro-zone. The scenario that offers the greatest potential for change is an SPD-Green coalition with the financial markets likely to view that outcome as a further shift away from austerity, and a greater chance of debt-mutualisation,” the analysts conclude.