Summary:

• USD retreats as there are fresh concerns over support for planned tax-cut reform
• By and large GBP ignores worrying package of UK data
• Investors in Europe await a pivotal session of Catalan’s parliament, hence sentiment is mixed

This morning we saw a board-based weakness of the US dollar as some reports argue that the support for Trump’s tax reform is at risk. In turn, EURUSD came back above 1.1770 handle. What’s interesting GBP was doing well despite record high deficit. On the other hand, the industrial data surprised to the upside and PM May won support for her Brexit stance. Moreover, Catalan’s president Carles Puidgemont is scheduled to hold a press conference in the afternoon. He still might unilaterally declare an independence so stock markets are cautious somewhat.

The US dollar eased on concerns over hurdles to planned tax reform. There are reports saying that some of allies of president Trump fear his feud with Republican senators may unravel the tax overhaul. It’s another sign underscoring that legislation work in Congress will be tough and implementation of the reform won’t be quick. USD now is losing against almost all of its G10 peers.

The outlook for the UK economy is still exceptionally hard to predict given the volatile data and the stance of the Bank of England. We got another dubious bunch of macroeconomic releases which may be played down in the short-term but it may matter in the longer-run (trade data). Industrial output and manufacturing production increased respectively 1.6% yoy and 2.8% yoy. On the other hand, the UK’s economy registered a record trade deficit in August. GBP is doing just fine gaining about 0.3% vs USD.

European stock markets started the day mixed despite the stellar performance seen across Asian markets where the Korean KOSPI turned out to be the sturdiest index there. On the other hand, the Spanish IBEX seems to be under some pressure as investors are awaiting a speech of Catalan leader Carles Puidgemont scheduled for the afternoon where a unilateral declaration of independence might be announced, on balance, that a scenario seems to be less likely when we take into account numerous protests which took place in Barcelona on Sunday.

Tuesday is relatively calm when it comes to macroeconomic releases. We’ve got some central bank speakers are on the agenda in the afternoon where the Canadian dollar could be among most volatile currency.