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11 Sep 2013
Flash:German elections will determine whether Merkel’s continues to rule-SOCIETE GENERALE
FXstreet.com (Athens)-Sebastien Galy, from Societe Generale, mentions that German elections on 22 September will determine whether Merkel’s CDU/CSU continues to rule in coalition with the FDP or is forced into a grand coalition with the SPD.
Key Quotes:
“The critical element is whether the FDP can pass the 5% threshold. If not, the SPD could choose a grand coalition with CDU/CSU or backpedal and form a coalition with Die Linke and the Greens.”
“The more probable outcome is a continuation of the current ruling coalition, though the market is likely positioned for a more periphery-friendly grand coalition.”
“A grand coalition would be seen as more periphery and EUR friendly, but would likely slow down the pace of any reform or reaction in a crisis, leaving the EUR potentially stronger and yet more brittle if a shock were to occur.”
“The latest Insa poll suggests support is consolidating for the main parties as the vote approaches. This doesn’t help the FDP which has fallen to 4%, while the “eurosceptic” Afd and and the Pirate party remain at 3%.”
Key Quotes:
“The critical element is whether the FDP can pass the 5% threshold. If not, the SPD could choose a grand coalition with CDU/CSU or backpedal and form a coalition with Die Linke and the Greens.”
“The more probable outcome is a continuation of the current ruling coalition, though the market is likely positioned for a more periphery-friendly grand coalition.”
“A grand coalition would be seen as more periphery and EUR friendly, but would likely slow down the pace of any reform or reaction in a crisis, leaving the EUR potentially stronger and yet more brittle if a shock were to occur.”
“The latest Insa poll suggests support is consolidating for the main parties as the vote approaches. This doesn’t help the FDP which has fallen to 4%, while the “eurosceptic” Afd and and the Pirate party remain at 3%.”