Fitch: Catalonia's secession from Spain is very unlikely

Eren Sengezer FXStreet

"The confrontational nature of the vote on Catalonia independence has increased near-term political risks," Fitch Ratings said in a recently published report.

Key quotes:

The immediate consequences of Sunday's vote are hard to predict.
There remains a risk of fresh disturbances.
The recent events could also weaken the ability of Spain's minority Popular Party government to implement national policy.
We view Catalonia's secession from Spain as very unlikely, and our central assumption remains that there will ultimately be a settlement on regional financial reform and greater autonomy for Catalonia within Spain.
We forecast above-trend GDP growth of 3.1% in 2017 and 2.5% in 2018, but a further sustained escalation in tensions between the Catalonia and Spanish governments would represent a downside risk.
A further escalation of tensions that undermine these assumptions could prompt negative rating action.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

EUR/USD deflates to fresh lows, targets 1.1600

The selling pressure on EUR/USD now gathers extra pace, prompting the pair to hit fresh multi-week lows in the 1.1625-1.1620 band on Friday. The continuation of the downward bias comes in response to further gains in the US Dollar as market participants continue to assess the mixed release of US Nonfarm Payrolls in December.

GBP/USD breaks below 1.3400, challenges the 200-day SMA

GBP/USD remains under heavy fire and retreats for the fourth consecutive day on Friday. Indeed, Cable suffers the strong performance of the Greenback, intensified post-mixed NFP, and trades at shouting distance from its critical 200-day SMA near 1.3380.

Gold flirts with yearly tops around $4,500

Gold keeps its positive bias on Friday, adding to Thursday’s advance and challenging yearly highs in the $4,500 region per troy ounce. The risk-off sentiment favours the yellow metal despite the firmer tone in the Greenback and rising US Treasury yields.