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Euro Struggles on German Political Risk; USD/CAD Stable at Start of Week

Published November 20, 2017
  • The euro remains mixed this morning after political developments out of Germany weighed on the multi-national currency. German Chancellor Angela Merkel suffered a setback in forming a majority government after a coalition partner unexpectedly pulled out of talks.
  • Merkel started on a weak foot in the coalition talks as her party won a reduced number of seats during this year’s election; the Chancellor can now form a minority government with the Green Party of Germany or face a new election if a coalition is not created.
  • USD/CAD remains in the high 1.2700s this morning as the market continues to look for developments on US tax reform. Investors do not expect a great deal of progress on the bill as the US has a shortened week ahead of the Thanksgiving holiday.
  • US President Trump continues to attempt to rally support around the bill as it moves on to the Senate for discussion; the legislation faces a tough fight here, as the Republicans can only afford to lose two votes.
  • The current round of NAFTA talks are set to wrap up this week in Mexico City as the three members continue talks on the 23-year old agreement. Canada and Mexico are set to offer rebuttals to the US over tougher automotive content rules.
  • Oil prices are weaker this morning; doubts have arisen on whether that the OPEC-led coalition will extend their cut agreement during their meeting at end of this month. US oil output continues to rebound as production levels are up nearly 15% from the lows of mid-2016.