Signs Pointing to Solid Third Quarter Growth

Wells Fargo Research Team Wells Fargo

U.S. Review

Signs Pointing to Solid Third Quarter Growth

Retail sales rose 0.1% in September. Less-volatile control group sales, which feed into GDP, increased 0.5%.
Industrial production improved 0.3% in September as mining and durable goods orders advanced. Production of business equipment grew a strong 8.0% in Q3.
Housing continues to underwhelm. Existing home sales fell 3.4% to a 5.15 million-unit pace. Total starts declined 5.3% in September due to a drop in the multifamily segment.  The federal government ran a $779 billion deficit during FY 2018. Tax collections grew 0.4%, while spending rose 3.2%.

Global Review

Chinese Economic Growth Continues to Edge Lower

Chinese GDP growth softened to 6.5% year over year in Q3, the slowest pace since 2009. That slowdown comes despite monetary policy easing from China’s central bank this year, and highlights the potential for more central bank support going forward.
U.K. and E.U. officials failed to reach a Brexit deal at a key E.U. leadership summit this week, adding to concerns about the potential for a “no-deal” Brexit. Uncertainty around Brexit developments should keep the Bank of England on hold for now, but it is likely watching rising U.K. wage pressures closely.

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Wells Fargo Research Team

Wells Fargo

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.