The tensions in Spain continue to rise as Madrid are set to take direct control of the Catalonia region. Catalonia declared independence on Friday as the Spanish Senate approved Prime Minister, Mariano Rajoy’s request to dismiss the Catalan leader, Carles Puigdement and the region ministers.
Madrid has now removed Carles Puigdemont from power. However, Puigdemont fails to accept this and advocates that he will only be removed from power by the citizens of Catalonia, despite risking imprisonment with his refusal. The tensions saw the Euro drop against its major counter parties on Friday afternoon.
Across the pond, US Advance GDP posted better than expected on Friday at 3%, making the second and third quarters of 2017 the best back-to-back quarter since 2014. The growth was helped by consumer spending,which grew by 2.4%, and business fixed investment, which rose by 1.5%. The Dollar was boosted on the release.
There is a quiet start to the week with no high tier data on the economic docket. From the Eurozone, Germany will be releasing their Retail Sales figure and Spain will post their Flash CPI and GDP readings. Across the pond, the US will release their Core Personal Consumption Expenditures Index and Personal Spending figures.
Tuesday will begin with the Eurozone releasing their CPI Flash Estimate figure, expected to post 1.5%, as well as their Prelim Flash GDP, forecasted to post 0.5%. In Canada, Bank of Canada governor, Stephen Poloz, will be testifying before the House of Commons Standing Committee on Finance. The GDP figure will also be released from Canada, expected to post 0.1%. The day will end with the US releasing the Conference Board Consumer Confidence and the Chicago PMI.
The US will be the focus of Wednesday, with the release of the ADP Non-Farm Employment Change and ISM Manufacturing PMI. The FOMC will be releasing their rate decision and statement. The markets are not expecting the Fed to raise interest rates in this meeting, so the statement will be closely analysed for any bullish tone indicating they will raise rates in December. Back in the UK, the Manufacturing PMI will be released, expected to post 55.9.
Thursday will be the biggest day of the week for the UK, starting with the release of the Construction PMI, expected to post a bearish 48.9. The Bank of England will be releasing their monetary policy summary and interest rate decision. The markets are expecting the BOE to raise interest rates from 0.25% to 0.5% in this meeting. After the statement is released, Governor Mark Carney will be holding a press conference. Across the pond, the US Weekly Unemployment Claims figure will be posted, expected at 235k. At the Alternative Reference Rate Committee Roundtable, FOMC member Jerome Powell will be delivering the opening remarks, whilst William Dudley will be delivering the closing remarks.
Friday will start with the release of the Services PMI from the UK, forecast to post 53.3. The focus will move to the US in the afternoon, with the release of the key Labour Data. Non-Farm Employment Change is expected to bounce back up to 311k after last month’s bearish -33k reading. Average Hourly Earnings and the Unemployment Rate Figures will also be posted, expected at 0.2% and 4.2%. FOMC member, Neel Kashkari is to speak at the Women in Housing and Finance luncheon about Monetary Policy and the 2018 Outlook.