Unphased By German Elections, Harshest Policy Adjustment Outcome Avoided

EUR/USD has stuck to a narrow trading band during the early rounds of Asia-Pac dealing, with the German Federal election proving too close to call (see earlier bullet for more colour on the matter). It would seem that the 'traffic light' and 'Jamaica' coalitions are the two most probable outcomes (in that order), while the most destabilising potential outcome from a policy perspective, a tri-party leftist coalition, has been avoided, which has allowed the rate to settle into the aforementioned narrow range, last dealing virtually unchanged just above $1.1720. Initial resistance comes in at the 20-day EMA, while initial support is seen at the Sep 23 low ($1.1684).