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Just days after a scandal involving Germany's top spy threatened to tear apart Angela Merkel coalition, moments ago Germany's chancellor suffered another major blow to her reputation, when her ally, and preferred candidate for Bundestag Caucus Leader, Volker Kauder was unexpectedly voted out of office as the influential head of the CDU/CSU parliamentary group after 13 years on the job.

He was defeated by deputy leader Ralph Brinkhaus in a 125 to 112 vote.

A journalist from Der Spiegel commented: "Merkel era slowly coming to an end".

The headlines as they come in:

  • MERKEL'S ALLY VOLKER KAUDER UNEXPECTEDLY LOSES VOTE AS HEAD OF HER CONSERVATIVE PARLIAMENTARY GROUP IN GERMANY'S LOWER HOUSE
  • MERKEL PARTY SPOKESMAN CONFIRMS DEFEAT OF FAVORED CANDIDATE
  • MERKEL SUFFERS UNEXPECTED DEFEAT IN PARLIAMENTARY CAUCUS GROUP
  • MERKEL'S CANDIDATE FOR BUNDESTAG CAUCUS LEADER DEFEATED IN VOTE

As of now, it is unclear what the consequences will be for Merkel and her ruling coalition, but if there is one thing Europe does not need, it is even more political chaos, especially in the country that has - so far - kept the rest of Europe together.

For now there has been no market reaction, although the EUR has come off its session highs after the report, when it was rapidly approaching 1.18.