Germany’s decision to hold an early election in February is raising hopes that a result can bring some political certainty to Europe’s biggest economy as it struggles to get out of the doldrums. Chancellor Olaf Scholz’s Social Democrats agreed with opposition lawmakers on an election date of Feb. 23, seven months earlier than scheduled. The vote sets up a a showdown between his SPD and the conservatives led by Friedrich Merz. The political crisis began after Scholz fired Finance Minister Christian Lindner of the Free Democratic Party in a dispute over budget policy. That spelled the end of the three-party governing coalition, which included the Greens. Investor confidence has worsened this month after the government collapse amid a spate of bad news from industry and the election of Donald Trump. This is despite Germany surprisingly dodging a recession in the third quarter. But the manufacturing sector is experiencing weakness and there are growing challenges for its automakers, including potential EU tariffs.
Currency strategists are ripping up forecasts for the euro in the wake of the US election and coming up with a new call: a slide toward parity with the dollar. At least 10 banks — including Barclays, Deutsche Bank and Nomura International — have slashed their calls in the past week, a turnaround from recent months when many were lifting the outlook for the common currency. The changing landscape in the currency market follows anticipation that global trade restrictions could become a key pillar of Trump’s economic policy when he returns to the White House next year. That’s been prompting investors to dump the euro — it’s already down nearly 3% since his victory to near this year’s low.