Summary:
The euro rose Wednesday as Germany's conservatives and Social Democrats reached a deal to form a government, easing EU political concerns.
The euro edged higher on Wednesday, helped by reports Germany's conservatives had reached a deal with the centre-left Social Democrats to form a government, easing political concerns in the EU's largest economy.
Germany is on track for a third year of recession for the first time in history, analysts said. Before the fiscal stimulus fully kicks in, the new government can do little to protect its export industry.
The European Commission has invited the sectors most impacted by tariffs to an in-person meeting on Thursday, according to Reuters, as the commission weighs new trade partnerships and further countermeasures.
The president of the commission Ursula von der Leyen also urged China on Tuesday to ensure a negotiated solution to problems caused by the sweeping import tariffs imposed by Trump.
Trump showed no sign of backing away from the new increase of 50% on China, which goes into effect in just a few hours, accusing Beijing of manipulating the yuan to offset the levies.
Fed fund futures jumped in early Asian trade to imply around 111-bp cuts this year. Chair Powel is facing a dilemma of whether he should defend slowing economy or contain sticky inflation.
The single currency has been stuck in a tight range, so it may need to breach 1.1050 to continue its rally. Otherwise it would likely retest 1.0900 and keep consolidating.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The FTSE 100 closed near its record high on Tuesday, lagging behind European indexes. Financial stocks stayed strong, supported by high interest rates.
2025-08-20
Palantir stock fell 9% amid mixed earnings and a cautious outlook. Why Palantir stock is down today and what's next.
2025-08-20
AUD/USD slips below 0.6500 as strong US dollar, global policy expectations, and geopolitical tensions outweigh domestic gains.
2025-08-19
