Arnaud Masset
Swissquote Bank Ltd
The single currency tumbled at market opening on Monday amid rising political tensions in Germany. The euro fell 0.60% against the US dollar and slid as low as 1.1722 after the Free Democratic Party (FDP) walked away the negotiating table, which would force Angela Merkel to form a minority government. The other solution would be to hold a fresh round of elections.
However, the sell-off was short-lived, which suggests that investors are not worried about potential negative impacts on Germany’s economic outlook. EUR/USD bounced back above 1.18. Indeed, there is little chance the political jitters disrupts the pace of business in the country.
On the equity side, the German DAX has opened slightly lower on Monday, at 12,932 points, before initiating a slow recovery towards Friday’s closing price. Overall, European indices were treading water this morning, with the exception of Swiss equities. The Swiss Performance Index (SPI) and Swiss Market Index (SMI) were up 0.50% and 0.66%, respectively, as Roche’s stock jumped more than 4% after the drug maker received approval for two experimental medicines for cancer and haemophilia.
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Elsewhere in the FX market, the pound sterling extended gains this morning, with GBP/USD rising towards the next resistance at 1.3338 (high from October 13th), as investors turned positive again about Brexit negotiations. Indeed, there were rumours that the UK would be willing to open the purse strings regarding the Brexit bill.
This report has been prepared by Swissquote Bank Ltd and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Swissquote Bank Ltd personnel at any given time. Swissquote Bank Ltd is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.
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