FXTM information and reviews
FXTM
93%
IronFX information and reviews
IronFX
92%
Libertex information and reviews
Libertex
91%
FXCC information and reviews
FXCC
90%
Markets.com information and reviews
Markets.com
89%
FxPro information and reviews
FxPro
88%

No clear winner in German elections


27 September 2021

After a knife-edge election that produced no clear winner, several weeks of intense political negotiations lie ahead in Germany. The Social Democrats narrowly won the vote but the conservative CDU party was just a couple of percentage points behind, so both parties will now try to form a government by luring the Greens and FDP into a ruling coalition. 

Political deadlock in Germany?

Hence, the next few weeks will likely bring a political firesale, where the two major parties put as much water in their wine as possible to win over the smaller coalition partners. While the most likely endgame is an alliance spearheaded by the Social Democrats that allows for greater investment both domestically and on a European level, the euro was still a touch softer on Monday as investors wrestled with the short-term uncertainty. 

There are several events this week that could rattle the euro, including a speech by ECB President Lagarde today at 11:45 GMT and the latest edition of Eurozone inflation on Friday. In the big picture, it’s still difficult to get excited about the euro even if Germany ultimately shifts towards a slightly looser fiscal regime, amid a slowing data pulse and an ECB that will likely fall years behind most central banks in raising rates.  

Fed vs Evergrande 

The Fed meeting last week did not disappoint. Chairman Powell essentially signaled that the tapering process will begin in November absent some catastrophe, while the new interest rate projections showed the FOMC is split 9-9 on whether rates will be raised next year already. 

Markets seem much more confident, with the first quarter-point rate increase now being fully priced in for December 2022 according to Fed funds futures. This timing recalibration propelled US Treasury yields higher, but the dollar couldn’t capitalize much as investors turned more sanguine that the Evergrande fallout will be contained, diminishing defensive demand for the reserve currency. 

The only pair that couldn’t ignore the sharp moves in the bond market was dollar/yen, which edged higher to play catch-up with yields and fading risk aversion. 

Stocks and oil cruise higher 

Wall Street seems to have put the Evergrande mishap behind it. The S&P 500 closed higher last week as investors concluded that Beijing would limit spillovers by ring-fencing and restructuring the company - a controlled demolition. The main risk now is whether this will lead to a hangover in the real estate sector that amplifies the ongoing slowdown in the economy. Chinese authorities will have to walk a tightrope as they attempt to revive growth since they can’t simply juice up the economy with a flood of cheap money like in the past, cautious of an already overleveraged banking system. 

In energy markets, oil prices are trading near three-year highs amid a combination of supply disruptions and spillover effects from soaring natural gas prices. A massive technical battle will be fought around the $76/barrel region in WTI. Overall though, higher prices would ultimately invite faster production hikes from OPEC, likely keeping a lid on any sustained rally. 

As for today, the economic calendar is low-key. Besides ECB President Lagarde, we will also hear from the Fed’s Evans (12:00 GMT), Williams (13:00 GMT), and Brainard (16:50 GMT). The rest of the week holds a political leadership contest in Japan, crucial PMI releases from China, and a vote on the $1 trillion ‘hard’ infrastructure bill in Congress. 

By XM.com
#source

Related

Three things you need to know about Tesla's latest nickel mining deal
Three things you need to know about Tesla's latest nickel mining deal

Tesla announced last week it struck a multi-year deal with Prony Resources for the purchase of 42000 tonnes of nickel. As transport undergoes a deep...

27 Oct 2021

Nascent XAU/USD bull to knock on the $1980 door
Nascent XAU/USD bull to knock on the $1980 door

As Benjamin Wong, Strategist at DBS Bank, notes, XAU/USD’s technical chart shows the possibility of a near-term bullish inverse head-and-shoulders pattern...

27 Oct 2021

Bank of Canada showtime, US spending deal in sight
Bank of Canada showtime, US spending deal in sight

The main event today will be the Bank of Canada decision at 14:00 GMT, which will likely spark fireworks in the loonie as policymakers either validate market...

27 Oct 2021

XAU/USD flirts with $1,800 amid stronger USD
XAU/USD flirts with $1,800 amid stronger USD

Gold witnessed some selling during the first half of the trading action on Tuesday and eroded a part of the previous day's gains back closer to multi-week tops...

26 Oct 2021

Euro slides, Wall Street conquers new heights
Euro slides, Wall Street conquers new heights

Wall Street started the week in good spirits. The heavy lifting was done by Tesla, which rose 12.6% to become a trillion-dollar company after it received...

26 Oct 2021

Stocks defy gravity, oil storms higher, dollar retreats
Stocks defy gravity, oil storms higher, dollar retreats

The overarching market theme continues to be how persistent this inflation episode will be and whether central banks will go into battle to suppress it. Hopes that price...

25 Oct 2021


Forex Forecasts

OctaFX information and reviews
OctaFX
86%
HotForex information and reviews
HotForex
85%
XM information and reviews
XM
80%
FXCM information and reviews
FXCM
79%
AvaTrade information and reviews
AvaTrade
76%
LegacyFX information and reviews
LegacyFX
75%

© 2006-2021 Forex-Ratings.com

The usage of this website constitutes acceptance of the following legal information.
Any contracts of financial instruments offered to conclude bear high risks and may result in the full loss of the deposited funds. Prior to making transactions one should get acquainted with the risks to which they relate. All the information featured on the website (reviews, brokers' news, comments, analysis, quotes, forecasts or other information materials provided by Forex Ratings, as well as information provided by the partners), including graphical information about the forex companies, brokers and dealing desks, is intended solely for informational purposes, is not a means of advertising them, and doesn't imply direct instructions for investing. Forex Ratings shall not be liable for any loss, including unlimited loss of funds, which may arise directly or indirectly from the usage of this information. The editorial staff of the website does not bear any responsibility whatsoever for the content of the comments or reviews made by the site users about the forex companies. The entire responsibility for the contents rests with the commentators. Reprint of the materials is available only with the permission of the editorial staff.
We use cookies to improve your experience and to make your stay with us more comfortable. By using Forex-Ratings.com website you agree to the cookies policy.