German politics is in flux. The Grand Coalition of the CDU, CSU and SPD parties has weakened following regional elections in October that saw CSU leader Horst Seehofer having to step down. Now, Chancellor Angela Merkel's party, the CDU, is turning a new page. Three candidates are running for the job of party leader amid tensions within the country and a revival of populist parties. The center-right bloc can count on less than 30% support among the electorate compared to 41.50% in the 2013 general election as both the Greens and the far-right Alternative for Germany have gained traction.
After more than three decades at the service of her party, Angela Merkel confirmed in October that she would not run for the party leadership again and would end her chancellorship by 2021. The result is today's CDU conference, which takes place at 3 p.m. in Hamburg , where 1,001 delegates will select her replacement. Three candidates are running for the role and the popular preference is for Merkel's preferred nominee, CDU general secretary Annegret Kramp-Karrenbauer, with businessman Friedrich Merz in second place in the polls. Many delegates are still undecided and the presentations of the candidates before the assembly today will be critical.
We don't expect the outcome to play a key role on the future direction of the party overall, however. Accordingly, as the focus of market participants largely remains on the OPEC meeting and the UK Brexit debate, the vote will not be decisive in the direction of the single currency. Currently trading at 1.1369, EUR/USD is heading along 1.1360 short-term.+