VIEW From MUFG: EUR/USD: the pair is..........>

FOREX: VIEW From MUFG: EUR/USD: the pair is holding up well in light of recent

developments We do not expect the release later today of the latest FOMC minutes

to materially alter expectations for a December rate hike. The next key catalyst

for the foreign exchange market will be the highly anticipated announcement of

who President Trump will nominate to become the next Fed Chair. It has the

potential to materially alter expectations for Fed policy in the coming years,

although the current combination of low inflation and Trump's desire to boost

growth should favour a continuation of gradual monetary tightening. As a result,

it should remain difficult for the US dollar to strengthen on a sustained basis.

The latest political developments in Europe are having only a limited negative

impact on the euro. The limited reaction appears reasonable to us at this

current juncture. The 10-year yield spread between Spanish and German government

bonds is still broadly in line with its average over the last couple of months.

There has been some relief overnight for the euro after Catalonia's President,

Carles Puigdemont, stepped back from making a formal declaration of independence

and called for more dialogue with the Spanish government in the coming weeks.