"Politischer stillstand" continues to drag down Euro

‘Politischer stillstand,’ a German phrase which translates literally into ‘political gridlock,’ perfectly characterizes the current German political situation. Investors and traders are becoming increasingly concerned that one of two scenarios will emerge following the election. First, Gerhard Schroeder could win, and forestall the implementation of much-needed structural and economic reforms. Second, if either Merkel or Schroeder win by a slight margin, and no clear-cut majority is produced, it could also sabotage any attempts at reform. It seems, therefore, that only a clear Merkel victory will be enough to reverse the Euro’s recent declines. You can bet currency traders will be waiting anxiously for the results of the election, which will likely determine the short-term course of the Euro. The Wall Street Journal reports:

The election victors will almost certainly have to make concessions to form a coalition, which could hinder its ability to deliver on its most ambitious promises for economic overhaul.

Read More: Euro Falls Anew Amid Uncertainty Over German Vote