Euro Weakens Amid German Turmoil and Rising Oil Prices

The Euro (EUR) has weakened against the Canadian Dollar due to rising tensions in Germany. Chancellor Friedrich Merz's conservative party suffered its worst regional defeat in post-war history, with the far-right Alternative for Germany (AfD) claiming first place in Sunday's state elections. This development leaves Merz's position increasingly precarious and is causing instability in the Eurozone.

Analysts at ING warn that 'risks of further spread widening remain,' and suggest that the Euro may start to pay greater attention soon if the move in French yields extends, with the French 10-year spread over German bunds hitting the 100bp mark. However, this development is still being treated with caution by the FX market.

Meanwhile, geopolitical attention is centered on US President Donald Trump's address at the UN General Assembly later today. His agenda includes a possible side meeting with Iranian President Masoud Pezeshkian and planned talks with Chinese President Xi Jinping and leaders from other Gulf nations throughout the week.