In view of Trump’s stance on Europe and Ukraine, the chancellor-in-waiting announced a historic plan to boost defense and the economy.

The parties hoping to form Germany's next government agreed to create a 500 billion euro infrastructure fund and overhaul borrowing rules, a tectonic spending shift that jolted markets on Wednesday on hopes of reviving Europe's largest economy.

Germany's Greens will negotiate hard before potentially giving their much-needed backing to debt reforms proposed by the conservatives and Social Democrats, parliamentary co-leader Katharina Droege said on Wednesday.

The euro climbed to a three-month peak against the U.S. dollar on Tuesday after Germany's conservatives and Social Democrats announced proposals to set up a 500 billion euro fund for infrastructure and overhaul borrowing rules aimed at increasing defense spending.

Germany's center-right Christian Democrats, under their leader and likely next chancellor, Friedrich Merz, have proposed a constitutional amendment to allow higher government borrowing to boost infrastructure and defense.