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If last week was the week of the central bankers, this week, it’s time for the politicians to take back control. Figuratively, at least.
After the chaos of the Catalonian independence referendum over the weekend, the European Union has reiterated the Spanish government’s view that the referendum was illegal, as well as maintaining that the ongoing unrest is an internal matter.
The autonomous government of the region announced that over 90% of the 2.2m people that were able to take part in the referendum voted for independence from Spain. However, the result was overshadowed after best part of 1000 people were hurt in clashes between the police over the course of the day – resulting in international condemnation, most notably from Belgian Prime Minister Charles Michel and UK opposition leader Jeremy Corbyn – something that has given the Catalionian President fresh impetus to declare independence, which would likely plunge the Spain and its government into a deep political crisis.
Undertandably, the Euro has started the week on the backfoot, paring gains from the back end of last week as investors react to the unfolding events.
But if that wasn’t enough for the EU to deal with, the European Parliament will also host a plenary session on Tuesday, where members, Commission President Juncker and Chief Negotiator Barnier will all vote on a resolution for the EU27 summit on 20 October, as well as taking stock of the latest round of Brexit negotiations.
Both sides claimed that significant progress had been made in the latest round of negotiations, despite noting that significant hurdles remain before the resumption of talks on 9 October and a key EU27 vote on progressing talks a fortnight later.
Meanwhile, in the UK, the Conservative Party conference continues in Manchester, with key members of the Prime Minister’s cabinet taking to the stage until she speaks at the conference’s conclusion on Wednesday afternoon. The headline speakers include Brexit Secretary David Davis (Tuesday; around 2:30pm), shortly before the hard Brexit champion Foreign Secretary Boris Johnson (Tuesday; around 3pm). After appearing to undermine the Prime Minister yet again with another article advocating for a complete split from the EU, all eyes will be on Johnson as questions over whether he can and will be sacked in the near future arise.
The US dollar, on the other hand, will stick to last week’s trend of central bankers driving sentiment as well as macroeconomic data due in the latter part of the week.
After news emerged that the hawkish former central banker Kevin Warsh was interviewed for the top job at the US Federal Reserve by the White House last week, the US dollar has extended its rally from early Setpmber’s 33-month lows. And while markets will continue to assess the feasibility of Warsh taking over the top job at the Fed, Friday’s US Jobs Report (1:30pm) will add an extra slice of excitement as the week comes to a close.
Central bank speakers may not have as great an impact on FX space as last week, there are still an array of top tier speakers scheduled including both Federal Reserve Chair Janet Yellen and ECB President Mario Draghi appear over the course of the week, the former at a conference on community banking (Wednesday; 8:15pm), while the latter speaks at the opening of the new ECB visiting centre at Frankfurt (Wednesday; 5:15pm).
It may be worth noting, however, that both events may not be blessed with comments on monetary policy, and Draghi may even end up being overshadowed by the release of the minutes from the ECB’s September meeting (Thursday; 12:30pm).
Key data this week (Sign up here to receive our daily live macro-calendar)
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UK Economic Announcements
09:30 Construction PMI
09:30 BoE FPC Minutes
Intl Economic Announcements
04:30 Monetary Policy Update (AUS)
06:00 Consumer Confidence (JP)
10:00 PPI (EZ)
14:45 ISM New York (US)
21:30 API Crude Oil Inventories (US)
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UK Economic Announcements
09:30 Services PMI
Intl Economic Announcements
01:30 Services PMI (JP)
08:50 Services PMI (FR)
08:55 Services PMI (DE)
09:00 Services PMI (EZ)
10:00 Retail Sales (EZ)
14:45 Services PMI (US)
15:00 ISM Non-Manufacturing (US)
15:30 EIA Oil Inventories (US)
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UK Economic Announcements
09:00 New Car Sales
Intl Economic Announcements
08:30 Construction PMI (DE)
09:10 Retail PMI (EZ)
12:30 Challenger Job Cuts (US)
13:30 Trade Balance, Jobless Claims (US)
15:00 Factory Orders (US)
UK Economic Announcements
09:30 Halifax House Prices
Intl Economic Announcements
01:00 Average Earnings (JP)
06:00 Leading Economic Index (JP)
13:30 Non-Farm Payrolls, Average Earnings, Unemployment (US)
15:00 Wholesale Inventories (US)
18:00 Baker Hughes Rig Count (US)
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