Spain on Edge, EURO lower

Geopolitical events again dominate market movements.

The Euro starts the week on the back foot as the market waits for the next big development in Spain, where Catalan separatists are expected to deliver a response after PM Rajoy moved on the weekend to impose federal authority on the region.

In Japan, the PM Abe’s Liberal Democratic Party won big as expected, they retained two-thirds majority in Sunday’s general election. Abe’s win makes the reappointment of Kuroda, and hence the continuation of ultra-easy monetary policy, significantly more likely. Yesterday’s victory sent the Nikkei to the longest winning streak on record and the yen to a new three month low outright.

Elsewhere, a number of central bank policy meetings begin this week – Bank of Canada (Oct 25) and European Central Bank (Oct 26). The BoC is expected to pause in its interest rate increases this time around. The bank will also publish its Monetary Policy Report (MPR), while the ECB is expected to announce a recalibration of its asset purchase program.

Also keeping investors busy will be the potential unveiling of President Trump’s pick for Fed chair and his efforts to overhaul U.S’s tax code. Later in the week, Q3 preliminary GDP data for the U.K and U.S also will be released.