The political developments in both New Zealand and Spain kept the markets busy on an otherwise calm Thursday. The Spanish government invoked Article 155 of the Spanish constitution in a bid to end the semi-autonomy for Catalonia. This comes amid the Catalonian leader Puigdemont threatened on Thursday to declare independence, in response to the Spanish government seeking clarification.
In New Zealand, the NZ First party announced that it was supporting the Labor party marking a change of government for the first time in nine-years. Although still a minority government, the Green party is also expected to lend support.
The kiwi fell sharply since the morning amid populist measures proposed by the NZ First party leader Peters. Among a number of things, the NZ First party wants to curb immigration and also prefers more central bank intervention and a weaker exchange rate. The RBNZ is also expected to see an additional mandate of full employment coming under its purview besides the current price stability.
On the economic front, UK retail sales fell 0.8% on the month more than expected. The data continued to dampen the outlook for a proposed BOE rate hike later down the line.
Looking ahead, the economic data today is relatively muted. Canada’s monthly inflation data is expected to be released alongside the retail sales numbers. The data comes ahead of BoC meeting next week. The Fed Chair, Janet Yellen is expected to speak later in the evening.
