The euro and the NZ dollar moved down on Monday after the elections in Germany and New Zealand. During the morning trade, the EUR lost 0.5% to $1.1896, while the NZD fell by 1% to $0.7265. Traders are focused on speeches of the heads of central banks of the USA, Europe, the UK, Canada, and Japan.
On Sunday, Angela Merkel’s party won the elections by gaining 33% of the vote, which was the weakest result of the Conservative Party since 1949. Second place was taken by the Social Democratic Party of Germany (SPD), headed by Martin Schultz – 20.5% of the vote. “Alternative for Germany” (AfD) gained 13.5% and went to the Parliament for the first time.
Political uncertainty also put pressure on the New Zealand dollar as the result of the elections showed that parties could not get an absolute majority to form a government without forming a coalition.
This week traders are focused on the Federal Reserve Chair Janet Yellen’s speech. Investors expect any signs of possible changes in the U.S. monetary policy. The chances for interest rate hike rose to 70% after a two-day Fed meeting last week. The Central Bank officials said that the rate could be raised one time this year and three times in 2018.
Also, market players are waiting for the head of the European Central Bank, Mario Draghi to speak. Economic reports on the Eurozone last week increased the chance the ECB will tighten the monetary policy.
The U.S. dollar index that shows the strength of the dollar against six major currencies rose by 0.07% to 92.01.
The British pound went up by 0.3% to $1.3541 after the Friday’s decline caused by uncertainty that the UK government will be able to implement its plans for Brexit.
The Japanese yen, meanwhile, fell by 0.2% to 112.19. Traders expect that the Prime Minister of Japan Shinzo Abe will announce the elections on October 22.