The euro slipped in early Asia trading Sunday after Chancellor Angela Merkel won a smaller-than-expected victory in Germany's federal elections and indicated a new government may not be in place until Christmas.
Merkel's Christian Democrats (CDU) and their sister party, the Christian Socialists (CSU), polled at around 32.7% in the national vote.
"There's no need to mince words ... we wanted a better result," Merkel said at her party's headquarters in Berlin. "But it is now down to us to form a government and without us, no government can be formed."
Schulz called the defeat "crushing" and said the SDP will abandon its previous coalition with the conservative CDU/CSU tie-up and sit in opposition in the German Bundestag.
That means Merkel has to reach out to a collection of smaller parties in order to form a workable government, which she indicated may not be in place until Christmas, in order to carry out her fourth term as Chancelllor.
If Merkel is to build a stable government in the 631 seat Bundestag, she will now likely need to put together a so-called "Jamaica Coalition" of the CDU/CSU (associated with the color black), the FDP (associated with the color yellow) and the Green party.
Source: Bloomberg Pro Terminal
Junior Trader Stefan Panteleev
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