Angela Merkel has won a fourth term as the Chancellor of Germany, but she faces significant challenges in creating a coalition, an obstacle that has sent the euro lower during Monday’s Asian trading session. The country’s far-right, anti-immigration party, AFD (Alternative for Germany) surged in the polls and has become the first far-right party to enter the parliament in over fifty years. The CDU-CSU claimed 33 percent of the vote, its worst performance since 1949, but a strong enough showing to keep the group as the largest in Germany’s parliament.
The euro was down 0.23 percent against the dollar as of 1:49 p.m. HK/SIN, trading at $1.1924. The euro was also down modestly against the Swiss franc and the yen.
The New Zealand dollar also struggled on Monday following weekend elections that failed to yield a ruling majority, opening the possibility of long, drawn-out coalition-building efforts. Speculation for a comfortable ruling party had sent the kiwi to six-week highs just last week, but the trend was reversed when the speculation was proved unfounded during the weekend’s polls. The kiwi was down 1.05 percent against the greenback, trading at 0.7262.
Oil Prices Remain Stable
Oil prices were little changed on Monday, holding onto their gains from Friday’s closing trading session, as major oil producers announced in Vienna that the market was on its way to rebalancing. OPEC, Russia and several other oil producers have cut production by approximately 1.8 million barrels per day since the start of 2017, helping to raise oil prices about 15 percent in the past quarter. Brent crude futures were down 0.19 percent to $56.75 per barrel while U.S. WTI futures were down 0.34 percent to $50.49 per barrel. Meanwhile, hedge funds increased bullish bets on U.S. crude oil to the highest levels in one month, Reuters reported on Monday.