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Euro under pressure

Eur_underpressure _FXPIG

The euro broke the still of an otherwise quiet preholiday market on Friday, as the single currency came under pressure as the threat of another crisis from Spain emerged after separatist parties won a crucial vote.

Where are currencies trading?

The ICE U.S. Dollar Index DXY, +0.05% a measure of the dollar against a basket of six major rivals, traded at 93.394, higher than 93.305 seen late Thursday in New York. The WSJ Dollar BUXX, +0.05% which measures the buck against a wider basket, rose 0.06% to 86.82.

The euro EURUSD, -0.1684%  slid to $1.1854 from $1.1876 late Thursday in New York. The euro tapped a 2½-week high on Wednesday of $1.1901.

The Swiss franc CHFUSD, -0.1515%  slipped to $1.0107 from $1.0118 late Thursday.

Against the Japanese yen, the dollar traded at 113.38 USDJPY, +0.05% largely unchanged from ¥113.33 late Thursday.

The British pound GBPUSD, -0.0747%  traded at $1.3379, down slightly from $1.3385 late Thursday.

The greenback was changing hands at $1.2734 versus the Canadian dollar USDCAD, -0.1649%  , little changed from late Wednesday.

What’s driving the market?

The three Catalan separatists parties won a majority in regional parliamentary elections in Spain on Thursday. The result was a rebuff to the central government and Spanish Prime Minister Mariano Rajoy who had called for those elections in a bid to quash the secessionist move after a chaotic and illegal independence referendum in October.

Rajoy’s government seized power of the region, dissolved its parliament and jailed its leaders — Carles Puigdemont, the ex-president, fled to Belgium where he’s been campaigning in exile. But Together for Catalonia, the party led by Puigdemont, got the most votes among the pro-independence parties, while Rajoy’s Popular Party got the least votes

The election, which saw a high turnout, is likely to reopen the debate about independence for the region, and potentially bring about fresh turmoil for Spain.

Elsewhere, the dollar has largely been holding steady since the passage of a $1.5 trillion tax cut that would slash corporate rates, which is now awaiting President Donald Trump’s signature.

What are analysts saying?

“The [Catalan vote] results were a major rebuke to the central government and its attempt to end the Catalan independence movement. Apparently we have only finished Stage 1 of this crisis; we are now entering Stage 2, which is likely to be even more difficult as this was an official referendum, not the illegal, nonbinding one that was held back in October,” said Marshall Gittler, chief strategist, ACLS Global, in a note to clients.

Still, he said it remains an isolated issue and may not shake the euro too much. “One indication that the market doesn’t perceive Catalonia to be an existential crisis for Europe is that CHF was the weakest currency on the day. If investors were truly worried about EUR, they would probably be piling into CHF. Perhaps the thinking is that the Catalonia crisis may further delay any ECB rate increase and therefore also delay and rise in Swiss rates,” he said.

What data is ahead

A pre-Christmas data dump is ahead for the U.S. All at 8:30 a.m. Eastern Time, durable goods, core capital orders, personal income, consumer spending and core inflation for November will be released. New-home sales for November and consumer sentiment for December are due at 10 a.m. Eastern.

Source: marketwatch.com

The euro broke the still of an otherwise quiet preholiday market on Friday, as the single currency came under pressure as the threat of another crisis from Spain emerged after separatist parties won a crucial vote.

Where are currencies trading?

The ICE U.S. Dollar Index DXY, +0.05% a measure of the dollar against a basket of six major rivals, traded at 93.394, higher than 93.305 seen late Thursday in New York. The WSJ Dollar BUXX, +0.05% which measures the buck against a wider basket, rose 0.06% to 86.82.

The euro EURUSD, -0.1684%  slid to $1.1854 from $1.1876 late Thursday in New York. The euro tapped a 2½-week high on Wednesday of $1.1901.

The Swiss franc CHFUSD, -0.1515%  slipped to $1.0107 from $1.0118 late Thursday.

Against the Japanese yen, the dollar traded at 113.38 USDJPY, +0.05% largely unchanged from ¥113.33 late Thursday.

The British pound GBPUSD, -0.0747%  traded at $1.3379, down slightly from $1.3385 late Thursday.

The greenback was changing hands at $1.2734 versus the Canadian dollar USDCAD, -0.1649%  , little changed from late Wednesday.

What’s driving the market?

The three Catalan separatists parties won a majority in regional parliamentary elections in Spain on Thursday. The result was a rebuff to the central government and Spanish Prime Minister Mariano Rajoy who had called for those elections in a bid to quash the secessionist move after a chaotic and illegal independence referendum in October.

Rajoy’s government seized power of the region, dissolved its parliament and jailed its leaders — Carles Puigdemont, the ex-president, fled to Belgium where he’s been campaigning in exile. But Together for Catalonia, the party led by Puigdemont, got the most votes among the pro-independence parties, while Rajoy’s Popular Party got the least votes

The election, which saw a high turnout, is likely to reopen the debate about independence for the region, and potentially bring about fresh turmoil for Spain.

Elsewhere, the dollar has largely been holding steady since the passage of a $1.5 trillion tax cut that would slash corporate rates, which is now awaiting President Donald Trump’s signature.

What are analysts saying?

“The [Catalan vote] results were a major rebuke to the central government and its attempt to end the Catalan independence movement. Apparently we have only finished Stage 1 of this crisis; we are now entering Stage 2, which is likely to be even more difficult as this was an official referendum, not the illegal, nonbinding one that was held back in October,” said Marshall Gittler, chief strategist, ACLS Global, in a note to clients.

Still, he said it remains an isolated issue and may not shake the euro too much. “One indication that the market doesn’t perceive Catalonia to be an existential crisis for Europe is that CHF was the weakest currency on the day. If investors were truly worried about EUR, they would probably be piling into CHF. Perhaps the thinking is that the Catalonia crisis may further delay any ECB rate increase and therefore also delay and rise in Swiss rates,” he said.

What data is ahead

A pre-Christmas data dump is ahead for the U.S. All at 8:30 a.m. Eastern Time, durable goods, core capital orders, personal income, consumer spending and core inflation for November will be released. New-home sales for November and consumer sentiment for December are due at 10 a.m. Eastern.

Source: marketwatch.com

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