6.11 - will euro's performance change for better?

What consequence will the economy of the Eurozone have after Merkel’s leaving the post?

Last week after Merkel’s party demonstrated the worst performance on the elections, German chancellor decided to vacate her post in 3 years. And we mentioned it but didn’t really have the chance to talk about the possible consequence of this decision for both Germany and European Union. And there is something to talk about. Because, as we all know decisions like that, especially taken by the long-term leaders rarely end up without political and economic consequence.

And while our guess was that after Merkel’s departure from the political spotlight euro is not going to feel so good it seems that the world society has entirely different opinion. The one which is far more optimistic that the one we have. It seems that there are a lot of scenarios where euro is actually going to react positively to Merkel leaving the post of the chancellor. We know. That is weird, right?

Usually when such big political changes occur national currencies do not stand is favor. Economies tend to fade and national currencies only become weaker. But in the case of Merkel and euro there is an obvious advantage – there is plenty of time in order to prepare the economy of the European Union towards all of the changes.

Plus, Germany is not the only pillar of the Union. There is also France. And while euro as well as the whole region seem to favor the current French president Emmanuel Macron, the next election will come in 2022, so, a year after Merkel’s departure. That means that euro has all the time in the world to prepare for the changes and possible changes alike.

Bullish prediction for euro is not only based on the upcoming changes and the possible reaction of the currency towards them. It is based on the recent behavior of the currency. Despite all of the activity of the greenback euro doesn’t look as susceptible to the movements as just a few months before. And why shouldn’t it? Europe is far more stable at the moment than the United states, politically speaking.

Take today. Brexit deal is only days away, and it seems like we finally will get it. Italian crisis in held within the scopes of the country and is maintained on the non-dangerous level at the moment. Merkel is preparing the grounds for the leave and strives to make the transition as light as possible. all of the factors point towards the soft climate for euro.

In the meantime, the United States are practically torn in half with midterm elections only hours away from opening the polling stations. Trump’s policies keep on poisoning the political climate not only inside the country but around the world as well. And that means a huge bummer for the greenback. No wonder we haven’t seen any definite performance from the greenback lately.

And with dollar going up and down on the see=saw on the daily basis it would be no wonder for us to see euro smothered under it. but, as we have already said – that is simply not happening at the moment. Euro seems surprisingly stable.

Could it be that euro does have a shot in becoming the new world currency? We wouldn’t exclude that possibility. On the contrary. We would endorse these changes. After All, euro does seem to have a better luck lately.

 

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