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The Catalan crisis is getting deeper. Catalonia’s President Puigdemont responds to the ultimatum by Spain with a threat of his own: declaring outright independence if the autonomy is suspended. This was implied already yesterday, and now becomes formal in a letter to Spanish PM Rajoy, minutes before the ultimatum expires

This could add onto the pressure on the euro which is not reacting at the moment.

Update:  Spain will begin suspending Catalan autonomy on Saturday – EUR/USD falls

Puigdemont says parliament can vote for independence in the absence of a dialog and the persistence of the repression. This will not go down well in Madrid.

The letter also mentions that the parliament did not vote for independence on October 10th. Now, the Spanish government wanted Catalonia to clarify they hadn ´t declared independence and now they have said it hasn ´t happened yet. Is this good enough? Probably not.

The second and final ultimatum for Catalonia has expired. The Spanish government demanded that their Catalan counterpart clarify that they did not declare independence on October 10th in parliament.

Spanish PM Mariano Rajoy is now set to the convene his government and begin suspending the Catalan autonomy, invoking Article 155 of the constitution. This has never been activated before and will further aggravate the crisis.

The latest move by Catalonia’s President Carles Puigdemont was to imply that if Madrid invokes Article 155, he will go forward by declaring independence in an unequivocal manner. On October 10th, he said Catalonia earned the right to independence but that he is suspending further action in order to facilitate a dialog. This mixed and somewhat confusing was not well received.

EUR/USD has been suffering some pressure due to the crisis. Catalonia’s is responsible for 20% of Spain’s GDP and around 25% of its exports. Spain is the euro-zone’s fourth largest economy and has been leading the continent in growth so far.