Euro Surges After Merkel Says Euro Is "Too Weak", Blames ECB

In the early days of the Trump administration, when the world was still worried - unnecessarily - that Trump would single out Europe, and especially Germany, as an unfair trading partner, slamming the Euro as too weak, Germany's fallback response was to say the currency is where it is due to the ECB's monetary policy, oh and that the Euro wasn't weak, but merely reflecting fundamentals. Well, moments ago the conventional narrative appears to have shifted once again after Angela Merkel herself took on the role of chief Euro critic, saying the common currency is "too weak" and blaming the ECB for the record German trade surplus, accusing Draghi's policies for the weak euro.

Headlines from Reuters and Bloomberg as they cross:

  • MERKEL SAYS EURO IS `TOO WEAK,' MAKES GERMAN PRODUCTS CHEAPER
  • MERKEL ON CAUSES OF GERMAN TRADE SURPLUS SAYS  EURO IS THAT WEAK BECAUSE OF THE ECB'S MONETARY POLICY:

According to Bloomberg, Merkel was quoted as saying “The euro is too weak - and that’s because of ECB policy  - and so German products are cheap in relative terms,” Merkel told school students in Berlin in discussion of trade surplus. “So they’re sold more.” Merkel added that additional investment in Germany could help to reduce trade surplus.

The immediate result of this latest attack on the ECB, this time not by Draghi's nemesis Schauble but by the Chancellor herself, was to send Bunds sliding to session low, with volumes surging as ~8k trades in 1 minute. the Euribor strip eding steeper; and most importantly, the EUR/USD spiking nearly 50 pips to day’s high of 1.1228.