Summary:

• US dollar was by far the strongest G10 currency this morning, continuing its winning streak from the previous week.
• Weaker euro improves sentiment on European stock markets, however, IBEX35 (SPA35 on xStation5) lags behind due to the referendum in Catalonia
• GBP has come under pressure as the UK manufacturing PMI disappointed

 It was really busy start to the new trading week. Investors, especially on Spanish stock market, digested the aftermath of an independence referendum in Catalonia, which was marred by violence. However, the weakness of euro in the great extent steamed from increasing strength of the US dollar. However, lower EURUSD supported other European bourses. Moreover, somewhat feebler UK manufacturing PMI weighed on GBP.

Yesterday, the independence referendum in Catalonia took place despite myriad police raids and riots seen on the streets. According to Catalan officials preliminary results of the voting have shown as much as 90% in favor of independence. Even as the overwhelming majority voted for forging an independent state, the government in Madrid condemned the referendum calling it illegal. Some disputes have to be expected, though the voting should not have far-reaching consequences on the single currency – EURUSD is losing over 0.6% as of time of writing, but it may prove to be only temporary.

UK manufacturing PMI slid in September from 56.7 (revised down from 56.9) to 55.9 falling short of the consensus at 56.2. Even as the data still illustrates quite broad-based optimism in the manufacturing sector, a move down might call into question the latest improvement in the sector especially as two other PMIs remain sluggish. As a result, the GBPUSD has held onto its drop being the weakest currency in the G10 basket.

Equity markets across the old continent kicked off the day higher on the back of the weaker euro ex-change rate which acts in favor of companies’ profitability. On the other hand, the Spanish index has opened sharply lower following the independence referendum. At the present, the IBEX35 (SPA35 on xStation5) is losing over 1.4%, while German DAX (DE30) is adding 0.24%, the CAC40 (FRA40) is going up 0.12%, the EuroStoxx50 (EU50) is is picking up 0.23% and the British FTSE100 (UK100) is rising as much as 0.50% underpinned by poorer performance  of the pound. 

In the afternoon investors should focus on the US manufacturing PMI (3:00 pm BST). The release may drop some hints ahead of the NFP report which seems to be the key figure this week.