Euro Slips on German Political Uncertainty

Although they won the most votes, Merkel’s centre-right Christian Democratic Union will have to stitch together an uneasy coalition to form a government. Investors reacted by selling the Euro on apprehensions that Merkel could run into difficulties forging a coalition.

The result marked a partial affirmation of Merkel’s emphasis on Germany’s economic stability and prosperity at a time of political upheaval elsewhere around the globe. However, the groundswell of support for AfD upended any notion that Europe’s most important geopolitical player is immune to the populist sentiment roiling other western democracies. It also revealed the extent of resentment toward Merkel’s 2015 decision to open the country’s borders to more than a million asylum seekers amidst the European refugee crisis. The EURGBP pair is sliding early Monday to last trade around the 0.8790-zone.

Headline consumer prices in Canada rose by the most in four months during August, giving policymakers further room to consider lifting the key lending rate again before the end of the year. Data compiled by Statistics Canada showed that on a yearly basis consumer prices edged 1.40% higher last month, up from 1.20% recorded in July.

The Bank of Canada has hiked interest rates twice since July, with investors projecting as many as three more increases by the end of next year amid speculation that the Central Bank will act decisively to curb any inflation pressures. Separate data from Statistics Canada showed that retail sales in the country surged more than forecast in July as consumers increased their spending on new cars. The 0.40% gain easily topped economists’ expectations for a rise of 0.10%.  USDCAD is flat on the session, with the pair last seen ebbing near 1.2330.