Summary:

• Euro holds steady ahead of minutes of September ECB meeting
• Spanish stocks recover as Spanish government pours cold water on Catalonia’s bid for independence
•  AUD weakens after soft retail sales data from Australia

EURUSD was little changed this morning as investors were preparing for minutes of the last ECB meeting. Moreover, tensions in Catalonia calmed down somewhat which helped IBEX (SPA35 on xStation5) rebound and also propped up the single currency. Feebler retail data from Australia for August put pressure on AUD, despite a slightly upbeat trade balance.

The political landscape in Spain has deteriorated since the beginning of this week in the wake of a groundbreaking vote in the Catalan referendum which could have fundamentally changed the relationship between Spain and the most affluent region of the country – Catalonia. All the same, there are still many doubts surrounding a potential declaration of independence which has been proclaimed to be announced earlier this week. the IBEX (SP35) has already marked a stunning turnaround nearby its key support level we’ve pointed out lately. On the other hand, a Spanish risk premium remains elevated (it has narrowed subtly of late) as it was depicted in the chart above, hence it could cool off buyers’ optimism to some extent.

However, other stock markets across the old continent kicked off the day mostly with modest gains. During the Asian session was quite green with the Hang Seng (HKComp) being the most standout index as it gained 0.8%. Besides, both the NIKKEI (JAP225) and the Australian S&P/ASX 200 (AUS200) closed the day flat. Notice, the latter was unimpressed with the grim retail sales report from the domestic economy.

The Australian dollar got a massive blow as retail sales disappointed across the board making the AUD the worst performing currency among its peers in the G10 basket. First and foremost, retail sales came in at -0.6% mom while economists surveyed by Bloomberg had predicted a 0.3% yoy increase. Moreover, the prior release was revised down from 0% mom to -0.2% mom. It was the feeblest reading from early 2013 and could act unfavorably in terms of household expenditure as both metrics are fairly well correlated.

The key event coming up today is minutes of the last ECB meeting. The figure should cast more light on internal discussion and market participants will look for any details of planning reduction of the bond purchase program. Thus, the publication may spur some volatility in EUR. Moreover, we get weekly jobless claims form the US and Canadian trade balance data. There are also scores of central bankers scheduled to deliver speeches today.