Euro Falls After German Parliament Approves Expanded EFSF Measures
After much contention stirring within Chancellor Angela Merkel’s ruling party that put the future of the Euro-zone very much at stake, the German parliament voted in favor of an expanded European Financial Stability Fund. Ahead of the vote on Wednesday, speculation arose that the vote would still pass but be uncomfortably close, perhaps as a referendum on Chancellor Merkel’s leadership.
Lawmakers voted 533 in favor of the bill, while 85 voted against, with three abstentions. However, the overwhelming vote in favor of the expanded EFSF looks to provide a fresh injection of confidence in Chancellor Merkel’s party. Such a move could bolster risk-appetite, at least in the very near-term. The immediate reaction, however, was to the downside.
EUR/USD 1-minute Chart: September 29, 2011
Charts created using Strategy Trader– Prepared by Christopher Vecchio
In response to the news, the Euro was finding bids lower across the board, save the higher yielding Australian Dollar and New Zealand Dollar, as markets priced in the move throughout the overnight. The EUR/USD fell by approximately 40-pips in the minutes following the vote, at the time this report was written. Also lower across the board were the commodity currencies.
Written by Christopher Vecchio, Currency Analyst
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