The main contenders
The current German chancellor Angela Merkel and social democrat Martin Schulz are the designated frontrunners in the German elections. Who will win the race?
The former research scientist starts her political career in the late 1980s as a spokesperson of the German pre-unification government. The designated most powerful woman of the world runs the Christian Democratic Union (CDU) and has been the German chancellor since 2005.
The leader of the second largest party in Germany enters politics in the 1970s and was mayor of the city of Würselen from 1987 to 1998. His career culminated in 2012 when he got elected President of the European Parliament. One of his major visions for Germany is progressive and fair taxation.
These charts compile the latest polls on the voting intentions of German electors.
Dax (#DE30) Social Sentiment Index
Which emotions are driving the markets during the elections?
Our partnership with the Swiss Federal Institute of Technology in Lausanne enables us to get all the answers.
Bullish vs. Bearish Markets
Our Social Sentiment Index on the DAX (#DE30) is currently Bullish.
This means German investors foresee in the near term a rise on their national stock index.
The Dax (#DE30) Social Sentiment Index, is an Artificial Intelligence solution which allows us on a daily basis to detect and measure opinions on the Internet and social media networks.
All the available Data will be displayed on the widget, built for this purpose. In this way, an actionable insight for Dax (#DE30) traders can be provided so they don’t miss any good trading opportunities.
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on the German Election
Politics has become a key market driver, therefore investors should not simply dismiss the German election as a non-event. Germany’s federal election is the culmination of a busy political year, which saw a surge in populism, anti-immigration sentiment and Euroscepticism. Recent history has shown there are still uncertainties in voters’ behavior.
"The result in Germany, Europe’s dominant power and the world’s 5th largest economy, will have a lasting effect globally."
Heading into the September 24th German federal elections, Chancellor Merkel has a commanding lead over her main challenger Martin Schulz. Yet, only a year ago, Merkel’s Christian Democrat-led bloc (CDU+CSU) was threatened by Social Democrats (SPD) as Germans blamed her for the mismanagement of the refugee crisis. However, the keen political instinct that has kept her in power for 12 years kicked in. Merkel was able to shift toward the middle ground, crowding out opponents, including the Social Democrats and Schulz. In these uncertain days, Germany’s pragmatic voters have veered towards stability rather than radical change. In addition, Merkel has been helped by strong German growth outlook, low unemployment, a balanced budget and the promise of a marginal tax cut.
The result in Germany, Europe’s dominant power and the world’s 5th largest economy, will have a lasting effect globally. The leader of Germany will be tasked with steering difficult trade relations abroad and immigration crisis at home. Neither Merkel nor the markets are calling the results of the election yet. Merkel nearly squandered her first run at the chancellorship while plenty of events, policy mistakes, terrorist attacks or trade wars could still shift the current polls.
Our vision on the financial markets
Voters’ rejection of the Eurosceptic agenda has limited fears of fragmentation in the Eurozone. A solid Merkel victory should further strengthen the union and the Euro itself. Recent history indicates that the currency reacts to political events and scheduled risks. Ahead of the elections in France and the Netherlands, the Euro weakened against the USD, GBP and CHF on uncertainty risk. Post-election, the clear victory for EU-friendly candidates prompted the Euro to rally across the board.
"We believe the clearest way to trade the German elections is through the EURCHF."
Heading into the German elections, we suspect the market hype will ramp up uncertainty and drive volatility, likely weighing on the Euro. Yet our base scenario is that, while the exact makeup of Merkel’s CDU coalition is unclear, a strong victory is expected. In this context, we remain suspicious of microanalysis of every coalition possibility such as CDU/CSU and Schulz’s SPD or CDU/CSU, the Free Democratic Party (FDP) and the Greens. With Merkel’s experience and support for European integration, we see any bearish pullback as short-term, with a stronger Euro after the election (and Merkel’s CDU victory).
We believe the clearest way to trade the German elections is through the EURCHF. The currency pair has the highest sensitivity to developments in Europe. Despite ECB chief Draghi leaning on Euro strength, investors will focus on the positive aspects of Germany’s new government supporting fiscal and banking sector integration reforms. As for the CHF, with the SNB sidelined for the foreseeable future, investors will continue to use the franc as the primary funding currency, inducing further selling after the election.
Capitalize on the German election
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