Euro Shrugs Off Spain, NBI Chart Revisit

Independence talk is ramping up in the Spanish region of Catalonia after separatist parties won control of the legislature in a Sunday vote but the market isn't worried. The kiwi is the early laggard on soft employment confidence numbers while cable leads after six days of declines. Weekly CFTC positioning data showed traders reluctant to bet against the pound. A new Premium trade/chart/note was issued on  Friday ahead of Friday's NFP & the likelihood of any BoJ action.

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Voting results from the Catalonia election showed the main separatist party and far-left pro-separatists winning a small majority in the regional legislature. After the national government halted a separation referendum last year, this was seen as a proxy.

It's a powerful region but the risks of a breakup are low. Like we saw in Scotland, symbolic votes and polls are one thing but when it's time to cast the true ballot, voters get cold feet.  If the euro falls hard in early European trading, don't expect it to last.

The bigger picture may be more important. What we continue to see as the driving force in developed-world politics is frustration with austerity. Larger deficits will prove to be simulative for medium-term economic growth until the debt market enforces another round of discipline when another crisis hits.

In the short term, the New Zealand dollar is down 20 pips to start the week after Wetpac's quarterly employee confidence survey fell to a 3-year low of 99.3 from 102.8.

Trading may be quiet in Asia with China on holiday. The economic calendar is light with only the low-tier China industrial profits at 0130 GMT and Japanese leading index at 0500 GMT. The event to watch out for is a speech from Kuroda later but there isn't yet a set time.

Commitments of Traders

Speculative net futures trader positions as of the close on Tuesday. Net short denoted by - long by +.

EUR -81K vs -82K prior JPY -24K vs -27K prior GBP +1K vs -4K prior AUD -53K vs -41K prior CAD -38K vs -47K prior CHF -2K vs +4K prior

On the net, US dollar longs fell to the lowest in more than a year. In general, the moves were small but the market missed the CAD and GBP moves last week. The pound, in particular, is confounding traders.