The Euro hit a 3-day peak today as investors eye next week’s policy meeting of the European Central Bank. Analysts say that bond investors with an intent to hedge drove demand for the common currency; however, the absence of a fundamental driver and growing political uncertainties as a result of another promise of autonomy by Spain’s Catalonia region has limited any additional gains. Analysts say more clarity is necessary before the Euro can trend higher.
As reported at 11:17 am (BST) in London, the EUR/USD was trading higher at $1.1813, a gain of 0.13%; the pair earlier hit a peak of $1.18226, while the session low is currently at $1.17670. The EUR/GBP is up 0.57% and trading at 0.898 Pence, not far from the session peak of 0.89808 Pence while the low for the trading day is at 0.89230 Pence.
Catalonia Still a Concern
Overnight, the leader of the Catalonia region said that he would press ahead with a bid for independence is the Spanish government suspended Catalonia’s autonomy. Spain is the fourth largest economy in the Eurozone and there is a concern that a disruption in this key region could impact growth in the area. Strategists say that markets have already priced in political develops but anything unexpected might negative affect the Euro. In the meantime, markets are biding their time opening Euro longs ahead of the next ECB meeting on October 26th; analysts expect the policymakers will discuss reining in Quantitative Easing by trimming asset purchases.