Weekly comment – Germany votes as markets digest Evergrande
- Marios Hadjikyriacos
- Germans will go to the ballots on Sunday. The most likely outcome is a center-left coalition that pushes for more investment and spending. That could be slightly positive for EUR. However, the bigger picture is still grim as the ECB will lag behind other major central banks in removing stimulus.
- In Japan, the ruling LDP party will select its new leader on Wednesday. The winner is almost guaranteed to become the next prime minister. That said, this is unlikely to be a huge event for JPY, which is at the mercy of foreign yields.
- There’s also a plethora of data releases, including the ISM manufacturing PMI from the US, inflation from the Eurozone, and PMI business surveys from China.
- In the commodity sphere, gold continues to languish as the Fed reawakened US yields. In contrast, crude oil is enjoying the impact of supply disruptions.
- Finally, stock markets bounced back quickly after it became clearer that the Evergrande fallout will probably be contained to the local real estate market, and is unlikely to have global repercussions.
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