Partner Center Find a Broker

The euro was the biggest loser in the currency block as investors worried about Catalan’s elections. Meanwhile, the dollar and Asian equities started 2017’s last trading quarter on a strong note.

  • Over the weekend: China’s manufacturing PMI rises from 51.7 to 52.4 in September
  • Over the weekend: China’s non-manufacturing PMI improves from 53.4 to 55.4
  • Over the weekend: PBOC to cut RRR for some banks starting in 2018
  • China starts its week-long holiday today
  • AIG manufacturing index sips from 59.8 to 54.2 in September
  • Japan’s Tankan manufacturing index improves from 17 to 22 in Q3 2017
  • Japan’s Tankan non-manufacturing index steadies at 23 vs. 24 expected
  • AU MI inflation gauge up by 0.3% in September
  • Japan’s final manufacturing PMI up from 52.6 to 52.9 vs. 52.6 expected

Major Events/Reports:

Catalan election weighs on EUR

Over the weekend residents of Catalonia, Spain voted in an independence referendum that turned uglier than many had expected.

See, Catalonia’s government has been pushing for independence and has called for a referendum in order to make it all official. Problem is, the Spanish government AND the country’s top court have declared it illegal.

Fast forward to last weekend when the vote pushed through anyway. The Catalan government announced that preliminary results show 90% have voted in favor of a split. Unfortunately for them, Spain’s Prime Minister Mariano Rajoy declared the election illegitimate, declaring that “At this point, I can tell you very clearly: Today a self-determination referendum in Catalonia didn’t happen.

Even more unfortunately, the elections also saw violence in the form of national police raiding poll stations, dragging voters away, and in some instances firing rubber bullets on the public. Yipes!

BOJ’s Tankan surveys

Data from the Bank of Japan (BOJ) showed that large manufacturers are more confident on Japan’s business conditions than they’ve been in a decade.

The closely-watched Tankan quarterly survey clocked in at +22 in September, which not only marks the fourth straight quarter of improvement, but also marks the highest reading since September 2007.

Meanwhile the index for large non-manufacturers stood pat at +23 for the month and matched analyst expectations.

Analysts point to increased global demand, weaker yen, and wider corporate profits as possible reasons why manufacturers were so giddy.

Overall, the numbers support the BOJ’s optimism that an economic recovery would lead to higher wages and consumer prices. Unfortunately for yen bulls, markets mostly shrugged off the quarterly report on the back of concerns over a future election in the third largest economy.

Mixed risk sentiment

Despite worrying over Catalonia’s elections, equities traders seem to have mustered enough optimism to push equities higher. A strong Wall Street close may have factored in, though the start-of-month and quarter vibes could have also kicked in.

Nikkei celebrated further dollar gains by rising another 0.12% to 20,380.50 while Australia’s A SX 200 shot up by 1.02% to 5,739.40.

Commodity prices weren’t as lucky, however.

  • Gold slipped by 0.50% to 1,278.35;
  • Silver is down by 0.28% to 16.630;
  • Brent crude oil is down by 0.46% to $56.53, and
  • U.S. oil prices is down by 0.29% to $51.52.

Major Market Mover(s):

EUR

The common currency took the hardest hit on a day when most of the Asian markets (China, South Korea, Hong Kong, and India) are closed for public holidays.

EUR/USD is down by 16 pips (-0.14%) to 1.1778;
EUR/GBP is down by 8 pips (-0.09%) to .8810, and
EUR/GBP gapped lower before ending the session at 1.1428.

USD

The Greenback started the day on a strong note as a lack of major catalysts convinced traders to extend the dollar’s bullish run.

USD/JPY is up by 17 pips (+0.15%) to 112.82;
GBP/USD is down by 5 pips (-0.04%) to 1.3370;
USD/CHF is up by 16 pips (+0.17%) to .9703;
AUD/USD is down by 10 pips (-0.13%) to .7824, and
USD/CAD is back to 1.2490 after dipping to a session low of 1.2468.

Watch Out For:

  • 7:15 am GMT: Switzerland’s retail sales (y/y) (0.5% expected, -0.7% previous)
  • 7:15 am GMT: Spain’s manufacturing PMI (53.2 expected, 52.4 previous)
  • 7:30 am GMT: Switzerland’s manufacturing PMI (60.6 expected, 61.2 previous)
  • 7:45 am GMT: Italy’s manufacturing PMI (56.9 expected, 56.3 previous)
  • 7:50 am GMT: France’s final manufacturing PMI to remain at 56.0?
  • 7:55 am GMT: Germany’s final manufacturing PMI to remain at 60.6?
  • 8:00 am GMT: Euro Zone’s final manufacturing PMI to remain at 58.2?
  • 8:00 am GMT: Italy’s monthly unemployment rate (11.2% expected, 11.3% previous)
  • 8:30 am GMT: U.K.’s manufacturing PMI (56.3 expected, 56.9 previous)
  • 8:30 am GMT: U.K.’s manufacturing PMI (56.3 expected, 56.9 previous)