Monday was another day when the DJIA moved at least 500 points but, once again, EUR/USD remained firmly on a 1.22 ‘big figure’, albeit the pair ended almost half a cent up from its opening level. By the close in New York, the EUR had gained against every major currency except the Aussie Dollar and finished in second place on our one-day performance table. Overnight in Asia and during the European morning session, it has finally moved up to 1.23 and has outperformed all the other currencies we track closely here apart from the GBP.
After all the criticism of the Coalition agreement negotiation by Angela Merkel, in a prime-time ZDF television interview, she defiantly brushed aside any suggestion of quick change. “I ran for a four-year term. I promised those four years and I’m someone who keeps promises. I totally stand behind that decision.” Giving Finance to the Social Democrats is “acceptable” and “European policy will be formulated jointly” within the government, limiting the SPD’s ability to set the agenda, Merkel said. According to the Financial Times this morning, even her allies are talking openly about the post-Merkel era. Speaking on German radio on Monday, Günther Oettinger, the EU commissioner, said it was “clear to everyone” that Ms Merkel was entering her last term. He said she was too “smart and experienced” to repeat the mistakes of previous leaders such as Helmut Kohl, but will “over the next four years initiate the succession”.
The latest opinion polls show the declining popularity of the two main parties in Germany, with the CDU on 29.5%, down one point, and the SPD on a new low of 16.5%, down half a point and only 1.5% ahead of the nationalist Alternative for Germany. In September’s election the CDU received 32.9% and the SPD 20.5%, which means their combined share has fallen from 53.4% to just 46%. Ms. Merkel says she will name her six cabinet choices at a CDU conference on February 26th and answered accusations that she had not planned for the future by vowing they would be rising stars under the age of 60. The EUR opens in North America this morning at USD1.2350 and EUR/CAD1.5530.