MORNING BRIEFING: Merkel’s conservatives won a parliamentary majority, will choose her partner of choice.

[RTFX-Trading]

MORNING BRIEFING: Merkel’s conservatives won a parliamentary majority, will choose her partner of choice.

What’s new:
Japan: Finance Minister Fuji says USD/JPY Trend is not abnormal.
Germany: Merkel wins elections, chooses center-right.
World Bank: “Don’t take dollar’s place for granted”.
United States: Fed Governor Warsh expresses hawkish views.

Today:


Overnight Rates and Indices:
EURUSD: 1.4721 – 1.4564.
USDCHF: 1.0377 – 1.0251.
GBPUSD: 1.5973 – 1.5771.
EURJPY: 131.82 – 129.82.
USDJPY: 89.65 – 88.24.
DowJones: 9'664.19 -0.44%.
NASDAQ: 2’090.92 -0.79%.
S&P 500: 1’044.38 -0.61%.
Nikkei: 10’020.17 -2.39%.
Shanghai: 2’818.39 -0.74%,
Gold: $989.60.
Crude Oil: $65.67.
 
Comments:

The polls in Germany have closed and exit polls showed that the CDU/CSU and FPD have a narrow majority, enough for a center-right coalition. Chancellor Merkel will remain in her post, while markets will welcome a CDU/CSU – FPD coalition, as historically the German stock markets has performed better when a conservative chancellor was in power.

The G20 released the final statement from Pittsburgh. Limited discussion on currencies took place, however the tone appeared to be more positive and leaders declared the recovery effort as having “worked”, while continued to support economic activity in the short-run until economic recovery has “clearly taken hold”. The statement also stated that credible exit strategies should be communicated clearly to support confidence.

Fed Governor Warsh expressed hawkish views late on Friday and warned that “policy turnaround could come with greater force than is customary”, while indirectly addressing inflation concerns. This week several Fed officials are scheduled to speak, and the markets will be tuned in to see if they share similar views. This week, labor data will take center stage as Non-farm payrolls and the unemployment rate from the US are scheduled on Friday.

Have a nice day.

Emman Xuereb

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