- Catalonia’s leader Carles Puigdemont signed but suspended a declaration of independence
- Euro popped higher on the Catalan leader’s speech, gains were contained though
- Japanese machinery orders could bode well for capital investments
Although Catalan leader Carles Puigdemont decided to sign a declaration of independence from Spain he also chose to suspend the results of a referendum for several weeks to allow talks with the government in Madrid. Moreover, a document signed yesterday seems to have little legal credibility. As a result, the euro jumped higher as risks of independence subsided for the time being.
The Catalan leader told the regional parliament that the “people’s will” was to break away from Madrid, but he also said he wanted to “de-escalate” the tension around the issue. During his speech he expressed little concerns when it comes to an adverse effect on the whole economy due to an exodus (uprooting their headquarters) of some companies from Catalonia. There are assumptions that Puidgemont chose to hold off on declaring a unilateral independence without negotiations with Madrid mainly on the back of protests which took place in the Catalonia’s capital on Sunday and pressures from the European Union. The country’s government decided to hold an extraordinary cabinet meeting for Wednesday (8:00 am BST) in order to think through possible subsequent steps which may have to be taken in the nearest future.
On top of that, the Asian session was quite calm with no relevant moves across the FX market. The sole reading worth mentioning is Japanese machinery orders which picked up significantly 4.4% yoy while the consensus had suggested just 0.7% yoy. The increase of machinery orders could be seen as a good omen as far as capital investments are concerned.