The euro has edged higher in the Thursday session, as EUR/USD stays close to the 1.18 line. Currently, EUR/USD is trading at 1.1812, up 0.22% on the day. On the release front, there are no major indicators out of the eurozone. In the US, unemployment claims are expected to dip to 240 thousand, while the Philly Fed Manufacturing Index is forecast to slow to 21.9 points. On Friday, Germany releases PPI and the eurozone will publish its current account surplus. The US will release Existing Home Sales and Fed Chair Janet Yellen speaks at an event in Washington.
The crisis in Catalonia continues, as the Spanish and Catalan governments remain entrenched in their positions. The Catalan government has refused to comply with a demand by Madrid to withdraw its declaration of independence, and the central government has responded harshly, saying it will invoke Article 155 of the Spanish Constitution and impose direct control over Catalonia. However, the government must first receive approval from the Senate before it implements this measure, and the Senate is expected to approve the move on Saturday. Madrid has said that it will not invoke this measure if the Catalan parliament calls new elections, but so far there has been no response from Catalan leaders. The deepening constitutional crisis has led hundreds of companies to start leaving Catalonia, and the Standard and Poor’s rating agency has said that the region could face a recession if the situation is not resolve. Investment projects are at a standstill in the region, and if the situation worsens, investors could get nervous and send the euro lower.
European Union leaders will gather in Brussels on Thursday and Friday. The meeting was expected to focus on Brexit, but with talks with Britain floundering, Brexit will likely take a back step. The EU may do little more than declare that trade talks with London will not begin until there is more progress on other issues, such as the amount Britain will pay when it leaves the club. There are a number of other topics on the agenda, including the crisis in Catalonia, the Iran nuclear agreement, and a proposal to deepen integration among EU members.