Euro Ruffled by Spanish Uncertainty

Spanish police used rubber bullets to disrupt an independence vote in Catalonia on Sunday, leaving hundreds of citizens injured while presenting Madrid with a huge challenge as its seeks to ease tensions in the wealthy north-eastern region. Preliminary results showed that of the 2.20 million ballots counted, 90% were in favour of a split. Spanish Prime Minister Mariano Rajoy has denounced the vote as illegitimate.

Meanwhile, the dollar was boosted by speculation surrounding US President Donald Trump potential Federal Reserve Chair picks to succeed Janet Yellen.  Former Fed Governor Kevin Warsh has been circulating as a potential front-runner for the position. Warsh is widely-considered to be more hawkish than current head Janet Yellen. EURUSD is trading around 1.1760 early Monday, with 1.1750 representing the immediate downside support.  Considering the short-term trend has turned bearish, a breach of this level could see selling pressure intensify.

Canada's budget gap tightened in July from a year ago on a substantial increase in income and sales-tax revenue. The Finance Department's monthly fiscal monitor publication issued on Friday showed that the country posted a July budget deficit of CAD 193.00 million ($155.00 million), compared to a deficit of CAD 1.76 billion in the same period last year. Revenue jumped 12.80% in July from a year earlier amid higher intakes from both corporate and personal taxes.

Separate data from Statistics Canada revealed that producer prices rose 0.30% in August amid higher costs for energy products, but nevertheless fell short of economists’ forecasts for a gain of 0.50%. The July figure was downwardly revised to show a drop of -1.60% from the originally reported -1.50% decline. With the tailwinds from the US dollar, USDCAD continues to gain ground in Monday morning trade, edging back above 1.2500.