EUR/USD a fade on scepticism over Merkel's Conservatives coalition talks?

The news of in coalition talks in Germany between Merkel's Conservatives and the SPD party sent the euro markedly higher on Friday and broke onto the 1.21 handle before climbing the stairs to 1.2160. The euro was crystalising between the highest level in three years at 1.2201 and 1.2189 offered on further speculation that Merkel is likely going to be able to form a ‘grand collation’.

However, Reuters reported that senior party figures are not completely sold on the idea:

“There is a great deal of scepticism,” Manuela Schwesig, SPD state premier in the northeastern state of Mecklenburg-Vorpommern, told NDR Info radio.

Reuters also reported that "Leaders of the SPD and the conservative camp thrashed out a 28-page blueprint for a possible “GroKo” grand coalition government this week, recommending that their parties hold formal coalition talks.

But at a regional party meeting in Wernigerode, a medieval town of half-timbered buildings at the foot of the thickly forested Harz hills, delegates wrestled with the issue which has split the party down the middle.

“Important demands that the SPD made ahead of the elections are simply not in the document,” said Kevin Kuehnert, leader of the SPD’s Jusos youth wing, who will spend the next week criss-crossing the country arguing for delegates to vote “No” to coalition talks at a special party congress next Saturday," the article wrote.