Euro Falls In Asia As Germany Coalition Talks Appear To Fail
The euro fell in Asia on Monday as German Chancellor Angela Merkel said on Monday she would meet the German president to inform him that she had failed to form a coalition government with the Greens and the pro-business Free Democrats (FDP).
The decision to meet President Frank-Walter Steinmeier, who has the power to call a new election, signaled that Merkel would not seek a minority government with the Greens after the FDP unexpectedly pulled out of the coalition talks.
"It is a day of deep reflection on how to go forward in Germany," Merkel told reporters. "As chancellor, I will do everything to ensure that this country is well managed in the difficult weeks to come."
EUR/USD eased 0.40% to 1.1744.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose 0.26% to 93.85.
Earlier, Japan reported its trade balance for October came in a a surplus of with a surplus of ¥25 billion, narrower than the ¥33 billion seen and imports rose 18.9%, compared with a 20.2% gain seen and exports rose 14.8%, missing the up 15.8% gain expected. Later on Monday, European Central Bank President Mario Draghi is to testify on the economy and monetary policy in the European Parliament in Brussels.
This week, investors will be focused on Wednesday’s Federal Reserve meeting minutes for fresh clues on the likely trajectory of monetary policy. U.S. data on durable goods orders will be the highlight of the holiday-shortened week. Markets stateside will remain closed on Thursday for the Thanksgiving holiday.
Last week, the dollar fell against a basket of the other major currencies on Friday as investors remained skeptical over whether Republicans can pass a historic tax overhaul.
The House of Representatives on Thursday passed a bill that would lower corporate taxes and cut individual taxes for most households in 2018, in a step towards the biggest U.S. tax code overhaul since the 1980s.
But the legislation may face a tougher fight in the Senate amid resistance within Republican ranks. Senate lawmakers are expected to vote on their version of the bill after this week’s Thanksgiving holiday.
The dollar was also pressured lower by news reports that special counsel Robert Mueller’s investigators probing possible Russian interference in the 2016 U.S. election had subpoenaed President Donald Trump’s campaign requesting documents.
The reports added to concerns that the probe will hinder the Trump administration’s ability to pass tax reform or other fiscal reform measures that would support the economy.
The euro pushed higher, with EUR/USD up 0.18% at 1.1791 late Friday.
Sterling retreated from a two-and-a-half week high to 1.3213 in late trade after the European Union repeated an early December deadline for Prime Minister Theresa May to move on Britain’s Brexit divorce bill.
Meanwhile, the Australian and New Zealand dollar both ended the week sharply lower against the greenback as the narrowing spread between U.S. and both Australian and New Zealand government debt undermined their appeal as carry trades.