Euro trims gains ahead of German elections

Economies.com
2017-09-22 17:01PM UTC

Euro trimmed its gains in American trade against the dollar ahead of German elections next Sunday, with Chancellor Angela Merkel's Christian Democrats expected to win a fourth term, while earlier upbeat euro zone data bolstered expectations of policy tightening soon by the European Central Bank in the October meeting.  

 

EUR/USD rose 0.1% at 16:43 GMT, trimming down its earlier 0.5% lead from the opening of 1.1940, with an intraday high at 1.2004, and a low at 1.1935. 

 

Euro marked a 0.4% profit yesterday on short-covering after hitting a one-week low at 1.1861, with dollar losing steam against most major currencies. 

 

During his Frankfort speech yesterday, ECB president Mario Draghi said that monetary policy isn't an appropriate tool to fix financial diversions, while failing to include any signals about the asset purchase program, even though the bank is expected to take crucial steps next October. 

 

Draghi's other speech in Ireland didn't contain any details about the euro zone's monetary policy as well, focusing otherwise on the youth unemployment rate and some other social issues. 

 

Earlier European data showed expansions in the manufacturing sectors of France, Germany, and the whole region in September by the fastest pace since 2011, with services growing better than expected this month as well. 

 

The strong data paved the way for upbeat corporate earnings results for the third quarter of this year, and asserted the euro zone's recovery and momentum, while bolstering prospects of ECB policy tightening. 

 

Otherwise, German elections will take place next Sunday. with Christian Democrats taking a assertive lead in polls at 36%, as the Social Democrats fell to 8.5%. 

 

Most analysts don't see risks in German elections as Merkel is widely expected to win a fourth term. 

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