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Dollar up versus euro on Merkel exit news, U.S. data supports

By Saqib Iqbal Ahmed

NEW YORK (Reuters) – The dollar edged higher against the euro, on Monday, close to a 10-week high hit last week, on news German Chancellor Angela Merkel would not seek re-election as head of her CDU party.

More broadly, the dollar added to recent gains against other major currencies, supported by robust U.S. consumer spending data on Monday.

Merkel said she would not seek re-election as party chairwoman, heralding the end of a 13-year era in which she has dominated European politics.

“Currency markets considered her the Iron Lady of Europe,” said Karl Schamotta, chief market strategist at Cambridge Global Payments in Toronto.

“This is certainly not positive for the euro’s political backing,” he said.

Merkel’s weakness at home may limit her capacity to lead in the European Union at a time when the bloc is dealing with Brexit and a budget crisis in Italy, said Schamotta.

Merkel has loomed large on the European stage since 2005, helping guide the EU through the euro zone crisis and opening Germany’s doors to migrants fleeing war in the Middle East in 2015 – a move that still divides the bloc and Germany.

“Merkel has been a stabilizing force for the euro zone throughout the last decade,” Craig Erlam, senior market analyst at online forex broker Oanda, said in a note.

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