Merkel's coalition partner party, SPD, is reported to prepare for new elections

This, according to a report by Der Spiegel - though with no cited sources on the information. The report says that the party had three internal meetings late last week and early this week to prepare for possible new elections.

It says that the SPD party discussed possible dates for new elections and see early September as one of the possible timelines.

Merkel meanwhile is out on the wires now saying that Sunday's EU meeting on migration will the the 'first exchange' and that the meeting won't produce a statement as it is a working meeting. That's not too optimistic given that she only has until the end of June to come up with something substantial.

Although the euro may have gotten some positive vibes from the composite PMI readings today, political risks in Germany may yet sour the mood in the next two weeks.