Euro nears 7-month high versus dollar on Merkel election victory: FRANKFURT, Sept 23 — The euro was 0.3 per cent from a seven-month high against the dollar after Angela Merkel won an overwhelming endorsement from German voters, putting her on course for the biggest election tally since Helmut Kohl’s post- reunification victory of 1990. Gains in Europe’s common currency were capped as the chancellor must now find a coalition partner after her preferred allies, the Free Democrats, looked poised to crash out of the lower house of parliament. The dollar gained against New Zealand’s currency with Federal Open Market Committee voting member William C. Dudley scheduled to speak today as markets assess when the central bank will reduce the pace of its bond-purchase programme. “This is a vote in favour of Merkel rather than a vote in favour of big changes,” said Steven Englander, Citigroup Inc.’s global head of G-10 currency strategy in New York. “It’s most likely Merkel will govern in a grand coalition with the Social Democrats, so that’s a slight euro positive because the government would be somewhat more friendly to the peripheral nations in the currency bloc.” The 17-nation currency traded at US$1.3528 at 6:41am in Singapore from US$1.3524 at the end of last week, near the seven-month high of US$1.3569 reached September 19. It was little changed at ¥134.35. The euro has strengthened 2.5 per cent this year against the greenback and 17 per cent versus the yen. The dollar was little changed at ¥99.31. It advanced 0.1 per cent to 83.60 cents per New Zealand dollar. Japanese markets are closed today for a national holiday. Merkel’s Christian Democratic bloc took 41.8 per cent of the vote in yesterday’s election, to 25.6 per cent for the Social Democrats of Peer Steinbrueck, according to projections on ZDF television. Grand coalition Merkel’s choice is limited to a re-run of her first-term “grand coalition” with her traditional SPD rivals or the first-ever national alliance with the Greens. Neither party rushed to endorse a coalition. The euro has climbed 15 per cent since Merkel took office in November 2005 even as the region’s debt crisis threatened to splinter the currency bloc. The election is a positive for markets because it removes uncertainty, said Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York. “We’ve had a lot of stress and the German election was a significant event,” he said. “What’s happening is that the memory of all these shocks is starting to dissipate,” Galy said, referring to events including tension over Syria and the Federal Reserve considering a reduction in asset purchases. October tapering The dollar gained late last week after Fed Bank of St. Louis President James Bullard, a voter on policy this year, said September 20 that a “small tapering” was possible in October. The Fed last week unexpectedly refrained from reducing its US$85 billion (RM270 billion) in monthly asset purchases, saying it needs to see more signs of sustained labour market gains. The central bank will be able to weigh the September jobs report and revisions of prior months as well as updated housing reports at its October 29-30 meeting, Bullard said. Bullard called October a “live meeting,” because “it’s possible you could get some data that change the complexion of the outlook and could make the committee be comfortable with a small taper in October.” Fed Bank of New York President Dudley and Bank of Atlanta President Dennis Lockhart are scheduled to speak today. — Bloomberg dlvr.it/41Fc1r
Posted on: Sun, 22 Sep 2013 23:58:05 +0000
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