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Counting Down To German Federal Election

Merkel’s CDU Party Currently Leading

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The German Federal Election is almost a month away when German citizens will head to the polls on September 24th, which likely to be the country’s most significant political contest in decades.

This election comes after the shocking Brexit referendum outcomes and the US election at the end of last year, which ended up with Donald J. Trump to be the president of the United States.

Those two events have led to a notable decline in the confidence of the public polls, as public polls were pointing for no Brexit and Hillary Clinton to be the president of the United States, while the opposite happened.

Yet, there was some relief to such movement in France, when the centrist Macron, liberal economically and left socially, has beaten the far-right Marine Le Pen in the latest elections.

Such outcome has eased the risk for the far-left parties in Europe. However, I won’t trust the current polls whether in Germany or elsewhere to decide on my trades.

Current Polls

For the time being, polls currently show that Merkel’s Christian Democratic Union (CDU) party – with its Bavarian sister party, the Christian Social Union (CSU) – will be the largest party after the election, but they might fall short of a majority.

Yet, this is common in Germany, and so the resulting parliament is in part determined by how the smaller parties perform, and which coalition possibilities will be born.

The latest polls show 38.6% for CDU/CSU followed by 23.9% for SPD, which I think that it’s a large gap. This also means that a surprise is still possible.

Geopolitical Tensions Away From Germany

Despite the fact that the Geopolitical tensions between the US and North Korea has eased significantly last week, after North Korea decided to delay the attach on the US airbase in Guam, the tensions are rising once again, but this time, it might hit the market with bigger scale.

Earlier this morning, North Korea warns of ‘merciless strike’ ahead of a military drill between the US and South Korea, which should take place later this week.

The market is taking the threat seriously, the entire safe haven assets has been rising since the beginning of the Asian session on Monday, including Gold which added more than $7 nearing $1290, while Silver jumped above $17 once again. Moreover, the Japanese Yen is sliding below 109.0.

Germany is not taking sides, but at the same time it is trying not to get involved and trying to keep the diplomatic backdoors open as the last thing we need is another nuclear war. Moreover, Germany is unlikely to get involved anytime soon, especially with Merkel hoping to win her 4th term.

Merkel Is Using Security For Her Favor

Last week, Germany’s Social Democrats rejected NATO’s target of spending 2% of national output on defense and accused German Chancellor Angela Merkel and her conservatives of Kowtowing to the demands of the US President Donald Trump.

However, Merkel fought back and attacked the SPD party, sharpens divisions by saying that Berlin must honor promise to contribute more.

After Barcelona attack, this would put Merkel in a good place to argue for more spending on security, since there were only few attacks during her last term.

Even if such demand was one of the US President Donald Trump demands, it is still logical, but Merkel is unlikely to fulfill all of the US administration demands, but security these days comes first. There is no place for argument.

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