U.S DOLLAR MOVES HIGHER AS POLITICS AND POOR DATA WEIGH ON THE POUND AND EURO

EURO LOWER ON CATALAN VOTE

The euro fell towards the 1.1700 level against the U.S dollar this week, after the Catalonian referendum vote for independence ended in uncertainty and violence. Catalonia's regional government declared victory after Sunday's vote, and declared they will claim independence from Spain this coming Monday.

Financial markets and the euro started to stabilize as speculation mounted, that the Spanish state and the Catalonian regional government will avoid a further escalation of the conflict, and find a compromise that could grant more powers to local authorities.

BRITISH POUND SLUMPS

Weak economic data from the United Kingdom and British politics pulled the British pound lower against the euro and the U.S dollar this week. Speculation from media sources that British Prime Theresa May could step down, and worse than expected UK Manufacturing and Construction PMI's sent the pound lower.

The EURGBP cross-pair recovered above the 0.8900 level, while the GBPUSD pair slumped under the 1.3100 level, as foreign exchange traders sold British pounds and moved into greenbacks.

AUSSIE WOES

The Australian dollar slipped lower against the U.S dollar this week, as Reserve Bank of Australia policy makers struck a cautious tone, while Australian retail sales slumped in August. The RBA kept interest rates on hold at 1.5 percent for the fourteen straight months and warned that strength in the domestic currency is starting to cause problems for the Australian economy.

Data showed that Australian retail sales recorded the largest drop in over seven years for the month of August, showing a -0.6 percent decline in August, while the previous month also posted a -0.2 percent in drop.

RECORD ISM DATA

The United States manufacturing sector unexpectedly improved in September, as the ISM manufacturing index soared to 60.8 from 58.8 in August, beating consensus expectations of 58.1, marking the highest ISM reading since June 2004.

The September ISM Non-Manufacturing Purchasing Managers Index also outpaced expectations, with the headline Composite Index climbing to 59.8 percent, which was far better than the previous months 55.3 reading, marking its highest official reading since August 2005.