The euro has been under pressure on Monday after the news that talks on forming a new government in Germany have collapsed. Market players, however, were slightly restless about the ongoing political instability in Berlin, although for the first time since the Second World War, general elections did not lead to a new government.
In fact, the euro has begun to cover some of its earlier losses during the European session, while German stock markets are trading at a modest 0.2% decline.
This anecdotal reaction to the market after the news shows that investors do not believe that a government crisis in Germany would cause a serious difficulty for the European economy.
On the other hand, data released last week showed that the German economy beat analysts' forecasts with 0.8% growth in the third quarter of the year. At the same time, confidence levels among German companies peaked in October, and the unemployment rate remained at a historic bottom. This undoubtedly shows that the European economy remains strong and no matter who will run Germany, investors remain confident in the economic performance of the eurozone.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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