Federal Reserve minutes to take focus

Last month’s Fed meeting saw the Federal Open Markets Committee announce that balance sheet normalization will begin in October. Today is our opportunity to look for further details on the path of how the balance sheet will be normalised and what that means for interest rates in light of investor belief that an interest rate rise will come in December. Some reticence has been noted in recent communications from Fed Chair Yellen especially around the confidence that rate setters are putting in the inflation picture. Today is another chance to see just how assured they are.

Catalonia in purgatory?

In the early hours this morning, after Catalan President Puidgemont announced his intention to declare Catalonia as independent, Spain’s government took the first step toward withdrawing the autonomous status of the region itself. Should the Spanish prime minister move ahead with this invocation of Article 155, Catalonia’s parliament would be effectively powerless and the region’s ability to create and legislate would be withdrawn. It appears the ball, again, sits in Catalonia’s court to further outline their intentions for the region.

The euro’s taken this instability in its stride, rising to a two-week high against the greenback, and now sits close to 1.1850 at the time of writing.

Deal or no deal

Unsurprisingly, here in the UK, Brexit is still top of the agenda after the Chancellor rejected the notion of spending public money on planning for a ‘no deal’ outcome with the European Union when the UK departs in 2019. This has ruffled feathers among the backbenchers where tensions were already running high after the prime minister declined to comment on whether she’d vote for Brexit if the referendum was re-run today.

The dollar’s still looking soft however, with GBP/USD back above 1.32.

Have a great day.