EUR Sinks Amid Political Uncertainty, Abe’s Election Good for the Market

EUR sinks amid political uncertainty, while Abe’s election in Japan is seen as positive for the market.

Due to the events shattering Catalonia right now and stagnating Brexit negotiations, the Eurozone currency dips. Investors sold off the EUR for the second day consecutively. Briefly looking at the charts, it seems to be forming the right-shoulder of an H&S top.

The parliament of Catalonia will come together on Thursday to discuss the potential independence of the region. After that, the current Catalonian president Carles Puigdemont might be charged with treason by the Spanish government, with high chances of facing 30 years in jail. After that, the political, social and economic future of the region is a matter of pure chance.

Across the Atlantic, in the United States the possibility of another rate hike yet remains an open question. Although, some believe that the likelihood of another one this year is high.

In the afternoon, EURUSD trades around 1.17376.

In Japan, Abe’s election is seen as positive for the market both in the shorter and longer term. By winning the elections, Shinzo Abe heads off on a route of becoming the longest-serving leader in the country after World War II. The market moved positively in response, with the Japanese Nikkei 225 index reaching a 21-year high and following an upward trend approaching its longest surge in its 70-year history.

Politically and economically supported, Japan faces a 6-consecutive-quarter unprecedented growth. According to Tokyo’s Monex Group’s CEO and Chairman Oki Motsumoto, Abe’s winning the elections is beneficial for the market. Although the move is pretty much done, Abe’s historical victory continues to be positive on a longer-term basis as well.

USDJPY trades around 113.809.

What to expect next

UK Prime Minister Theresa May speaks to the Parliament today about the progress on the Brexit negotiations;

The 3rd quarter GDP in the US released on Friday is estimated to have expanded at 2.5% YoY on account of the disasters caused by Hurricanes Harvey and Irma;

More big brands have reported their earnings today! Halliburton (NYSE: HAL) reported before open (consensus EPS $0.38 against $0.01 YoY);  T-Mobile (NASDAQ: TMUS), reported after the close (consensus EPS $0.44 against $ 0.27 YoY);

US Durable Goods Orders are envisaged to have gained impetus, which signals a more solid manufacturing growth.