Germans could be headed back to the polls in December
The euro dropped at the weekly open after coalition talks fell apart. The low was 1.1722 but it bounced back to 1.1812 early in Europe.
The latest move has been lower down to 1.1780 but overall, the market isn't too concerned about another vote. The assumption is that Merkel will come out ahead, somehow. I think that's a risky bet because the market is long euros and because instability in Germany would be a negative over the longer-term.
For now, it's an impasse because Schulz has also rejected a coalition that doesn't include Merkel.
The German Chancellor may try to govern with a minority. That might suit her rivals, who could then cast her as a force of instability rather than stability.
