Germany: Greens and SPD Vow to Support Euro

One of the difficulties associated with making progress on the sovereign debt crisis, and bailing out countries like Greece, has been foot-dragging from Germany. Angela Merkel, the conservative German chancellor, has seen divisions over the matter of eurozone bailouts in her coalition government. Some German politicians are loathe to use their resources to provide bailouts for other eurozone countries. Germany is already a huge player in supporting the euro on the FX market, since the German economy is the largest in the eurozone — and probably the most solvent. However, in order to appear more statesmanlike — and possibly undermine support for the political parties that make up the Merkel government — two allies are vowing to support the euro. The Greens party is leading the charge, and is supported by the Social Democratic (SPD) party. Recent state elections have provided some clout for these parties, and now the Greens are talking up their eurocentric tendencies. Merkel is in a tough position, especially if the vote, scheduled for September 29, on the European Financial Stability Facility, doesn’t go as she would like. So far, the news that an opposition government with support for the euro could soon be in power hasn’t done much for the euro against the U.S. dollar. As of 19:50 GMT, EUR/USD is down to 1.3402 from the open at 1.3519. EUR/GBP is at 0.8678 from 0.8732, and EUR/JPY is down to 103.19 from 103.39