Catalonia concerns drive Euro down

USD

The greenback gave back most of its recent gains at the end of last week with traders closing their positions and also owing to the lack of follow-through on tax reform. The ISM manufacturing PMI, which serves as an important indicator for Friday's Non-Farm Payrolls, is due today with analysts are predicting a fall to 57.9 from 58.8. Construction spending data along with the Markit final manufacturing is also on the tap.

EUR

The common currency ended the previous week on a positive note, in spite of mixed reports from the Eurozone. French consumer spending decreased by 0.3% as opposed to printing a predicted 0.2% increase while German retail sales fell 0.4% instead of rising by 0.5%. German unemployment change however was stronger than predicted with a 23K drop in unemployment against the predicted 5K decrease while French preliminary CPI showed a smaller than expected 0.1% downtick as opposed to the predicted 0.2% drop in price levels.  On Monday however, things changed with the euro slipping against the dollar after a violence-marred independence vote in Spain’s Catalonia region. Investors were watching the political situation in Spain nervously, after police used batons and rubber bullets to try to prevent Sunday’s vote in a show of force that left hundreds injured.

GBP

The British Pound was in a bit of a pickle on Friday as the current account balance showed a larger deficit of 23.2 billion GBP against the predicted 15.3 billion GBP deficit. The Prime Ministers Speech at the Conservative party conference also failed to gather positive momentum for the pound. While the manufacturing PMI is due with a dip from 56.9 to 56.3 is forecast, markets continue to take queues from Brexit to determine the direction for the currency. 

CHF

With the lack of top-tier reports from Switzerland the Swiss currency had a mixed run as reacted to currency-specific events. The KOF economic barometer printed a positive reading as it upgraded to 105.8 from 104.2, outpacing the predications at 105.5. The Swiss manufacturing PMI is due today with a fall to 60.6  from 61.2 predicted.

JPY

The Japanese currency reacted to market specific events.  The final manufacturing PMI increased to 52.9 from 52.6. In addition, the Tankan survey came out with no change for its non-manufacturing component at 23 whereas it printed a gain to 22 from 17 for its manufacturing component.  As no other reports lined up from Japan, market sentiment may continue to push the currency around. 

Oil

Oil dipped further below $57 a barrel on Monday as an increase in U.S. drilling and higher OPEC output put the brakes on a rally in which the market scored its biggest third-quarter gain in 13 years. Brent crude was down 12 cents at $56.67 a barrel. It notched up a third-quarter gain of around 20 percent, the biggest third-quarter increase since 2004 and traded as high as $59.49 last week. U.S. crude was down 17 cents at $51.50. The U.S. benchmark posted its strongest quarterly gain since the second quarter of 2016.

Gold

Gold slipped to its lowest in nearly seven weeks early on Monday as the U.S. dollar rose and equities gained, while growing expectations for a Federal Reserve interest rate hike in December also added to pressure.  Spot gold was down 0.4 percent at $1,273.60 an ounce, after earlier touching its lowest since mid-August at $1,272.35.

Economic Calendar (all times in GMT)

• USD ISM Manufacturing PMI (14:00)

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