Angela Merkel May Not Seek Re-election; Euro Weakens

angela-merkelGermany's Chancellor Angela Merkel
  • Angela Merkel May Not Seek Re-election; Euro Weakens

The Euro single currency dropped slightly on Monday following a report that German Chancellor Angela Merkel may not seek re-election as party chairwoman.

The Euro declined by 0.4 percent to $1.1359 against the U.S. dollar after a senior party member made the announcement. However, the currency has rebounded to $1.1379.

This will bring to an end a 13-year reign in which Angela Merkel has dominated European politics and clear the way for her Christian Democrats party to groom a successor.

Merkel has been guiding the European Union since 2005, helped revamp the economy during euro-zone crises and eventually open Germany’s door to migrants from the Middle East in 2015, a move that divides the European Union and even her home country, Germany.

“The euro has come under some pressure because she is seen as a pro-European force despite being a tough negotiator when it comes to bail-outs,” said Ulrich Leuchtmann, a currency strategist at Commerzbank.

Therefore, because of the perceived weakness in her capacity to lead at home, especially during a crucial period when the European Union is dealing with budget crises in Italy and Brexit with the United Kingdom, it will be a risk to put her up for re-election and forced the party into another coalition agreement like during the last election.

The US dollar continued to gain against counterparts, rising to a 10-week high against a basket of currencies as global uncertainty continues to dictate market sentiment.

“This likely reflects a number of factors, including long dollar positioning and, by the end of this week, some modest repricing of Federal Reserve expectations,” said Zach Pandl, co-head of foreign exchange at Goldman Sachs.

About the Author

Samed Olukoya
CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and, with over a decade long experience in the global financial market. Contact Samed on Twitter: @sameolukoya; Email: [email protected]

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