Catalonia Votes for Separatist Majority

The Euro is taking a beating after the Catalans vote in a separatist majority. 96% of ballots are counted and separatists have 70 seats out of 135 confirming a majority. By no means is this a vote of independence but with a majority in the regional government, we are likely to see the separatists take far more power over the state. Madrid will have to concede on many issues to avoid a full breakaway of Catalonia. Today marks the beginning of a new period of uncertainty for Spain, and the Euro is on the receiving end.

The result of US tax reform has had a relatively muted effect on the Dollar. As it was such a gradual process, and almost a foregone conclusion the Dollar hasn’t shown much of an interest. The effects of the Tax cuts are still very much unknown as we have never seen tax cuts so large in the world biggest economy. There is a chance that the majority of the deficit the government is taking on will end up in the private banks of the wealthy, and add little to the productivity of the US economy. However, we have already seen some of the major US corporates announce $1000 bonuses to all employees as a way of passing on the future savings they will have from the 40% reduction in the corporate tax rate. This is bound to be inflationary.

We saw US final GDP come in slightly below expectation at 3.2 vs 3.3%. This will be the one to watch in the new year as we see Trump’s initiatives take effect.

NZ GDP came in inline with expectations giving the flightless bird a nudge higher. Traders were expecting a weaker number following the poor sentiment we have seen since the election.

We had some very strong Canadian CPI and retail numbers overnight which caused the loonie to test previous highs. This will improve chances of further rate hikes in the new year as they look to follow their neighbours on the interest rate path. Another one to watch for the new year.

To finish the week, and the year we have a few 1st tier data releases which could cause exacerbated moves during these times of low liquidity. Be wary of this, and have your wits about you if you decide to trade the holiday markets. Widen stops and expect whippy markets as traders take advantage of trading conditions. For a useful guide to this, watch your how to trade holiday markets video.

That’s all from us this year at RSA. We will resume our research in the week of the 2nd of Jan. We look forward to the new year and lot of exciting improvements to our business, and a lot of great trading opportunities we hope to bring to you.

Merry Christmas!

Rakuten Securities Australia Review