The collapse of coalition talks in Germany is the big news driving the euro today

So far (read from the bottom up for chronological order):

Comments now from NatWest Markets in Singapore:

  • The news is negative for the euro
  • Longer-term implications aren't clear yet
  • Another election is now possible
  • Expects German fiscal policy to remain tight while situation being resolved (and thus supporting continued loose monetary policy from the European Central Bank)
  • Brings into question Merkel's ability to implement reform calls by the EU ... Merkel priority will be to shore up her domestic political support
  • In the case of fresh election, EUR/USD likely to fall
  • Likely down near bottom of its recent 1.15-1.20 range