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Euro holds gains on Catalonia speech, Asia markets rally

Oct 11 2017 07:39

Hong Kong - The euro held gains on Wednesday after Catalonia's leader stepped back from the brink in a standoff with Spain over independence while Asian markets pushed higher following another record close on Wall Street.

The single currency has come under strain since Catalans voted in an unofficial referendum on October 1 to break away from Madrid, fuelling fears about one of the eurozone's biggest economies.

The region's leader Carles Puigdemont signed a declaration of independence on Tuesday but suspended it in a speech that called for talks to resolve the country's worst crisis in decades.

While Madrid's equity market retreated the euro broke back above $1.18 for the first time since the day after the vote and in Asia it held up, buying $1.1815 having wallowed near $1.1700 on Friday.

A strong German export report also provided support to the euro.

However, it is still down two cents from its recent highs seen last month, with uncertainty continuing to dog the unit.

Stephen Innes, head of Asia-Pacific trading at OANDA, said that while the euro rose it "gained little traction as this is little more than kicking the can down the road. It's unlikely we've heard the last of this debate despite cooler heads prevailing".

The greenback was also facing pressure as investors fret over US President Donald Trump's tax reform plans with some fearing his spats with various senators could derail an agenda that has helped propel a dollar rally in recent weeks.

Innes pointed out that reports had been swirling suggesting Rand Paul, who helped kill Trump's health reforms, could refuse any deal as part of the Republican Party's push back against the president's anti-establishment agenda.

"If the grandstanders in the party's right-wing follow (the) Rand Paul lead, tax reform will most certainly struggle to pass," Innes said, adding that Trump was also embroiled in a row with other lawmakers from his own party who could decide to push back.

Equity markets across Asia were in positive territory following another record close on the Dow in New York.

Tokyo was 0.3% higher, while at the break Hong Kong was marginally higher and Shanghai gained 0.3%.

Sydney rose 0.6% and Seoul added 0.8%, while Wellington put on 0.3%.

Oil prices built on Tuesday's solid gains, which saw both main contracts surge on the back of news that Saudi Arabia planned to cut exports in November.

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