Separatist leaders in Catalonia did not declare independence on Tuesday. Instead, they called for dialogue. The euro pushed across the board before stabilizing in Wednesday trading ahead of the FOMC minutes. The post-Puigdemont euro moves helped the Premium EURUSD trade into a 100-pip gain. The trade remains open.

The coalition of separatist parties in Catalan parliament is struggling to find a way forward amidst threats from Madrid. Leader Puigdemont attempted inching closer towards independence without a formal declaration on Tuesday. Instead, asserted his mandate to declare independence, but asked for weeks of dialogue and hinted at international mediation. The hardcore ranks of separatists called it a betrayal while the government hinted he could be prosecuted for declaring independence anyway.

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The euro climbed about 15 pips after failure to declare independence. For the past few weeks, the currency has shown diminishing sensitivity to the Catalonya story; in part because Catalonia will continue to use the euro. The downsides at the moment relate to Spanish growth and that’s a small part of eurozone GDP. Nor is it likely to derail ECB plans to taper. EUR/USD rose above 1.1800 on the day, a 70 pip rise.

USD softness is re-emerging due to two main reasons: Renewed uncertainty about taxes after Trump picked a fight with high-ranking Republican Senator Bob Corker. Trump can only afford to lose two votes in the Senate and his spat with Corker has taken a personal tone.

The other reason is China, which seems to be undertaking a concerted effort to boost the yuan ahead of the party congress and Trump’s visit in a month. USD/JPY has fallen 1.3% in two days this week.

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Ashraf Laidi is an independent strategist and trader, founder of Intermarket Strategy Ltd and author of "Currency Trading & Intermarket Analysis". He is the former chief global strategist at City Index / FX Solutions, where he focused on foreign exchange and global macro developments pertaining to central bank policies, sovereign debt and intermarket dynamics. Ashraf had also served as Chief Strategist at CMC Markets, where he headed a global team of analysts and led seminars and trainings in four continents. His insights on currencies and commodities won him several #1 rankings with FXWeek and Reuters. Prior to CMC Markets, Laidi monitored the performance of a multi-FX portfolio at the United Nations, assessed sovereign and project investment risk with Hagler Bailly and the World Bank, and analyzed emerging market bonds at Reuters. Laidi also created the first 24-hour currency web site for traders and researchers alike on the eve of the creation of the euro. Laidi's analysis of currency markets stand out based on his distinct style in bridging the fundamental and technical aspects of the markets. Laidi regularly appears on CNBC TV (US, Europe, Arabia and Asia/Pacific), Bloomberg TV (US, Asia/Pacific, France and Spain), BNN, PBSs Nightly Business Report, and BBC. His insights also appear in the Financial Times, the Wall Street Journal and Barrons. He has given numerous interviews and lectures in Arabic, French, and to audiences spanning from Canada, Central America and Asia/Pacific.

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