Another week, another strong showing from the US consumer

Wells Fargo Research Team Wells Fargo

Summary

United States: Another week, another strong showing from the US consumer

Robust retail sales data were the main story on the U.S. economic data front this week. Elsewhere, data for industrial production and jobless claims offered additional evidence that the U.S. economy remains on solid footing.
Next week: New Home Sales (Tue.), GDP (Thu.), Personal Income & Spending (Fri.)

International: Israel-Iran tensions come to the surface

Recent tension between Israel and Iran shows that finding a steady state in the Israel-Hamas war remains elusive. We continue to believe military conflict will remain contained and not expand into Tehran or the broader Middle East. In England, inflation continues to ease, but perhaps not as quickly as policymakers may have hoped for.
Next week: Middle East Geopolitical Tensions, India Prime Minister Election (Apr.-Jun.), Central Bank of Turkey (Thu.)

Interest rate watch: Will home buyers ever get some relief from elevated mortgage rates?

The 30-year fixed rate mortgage has risen recently, but it still remains below last autumn's high-water mark of 8%.

Topic of the week: Steel your nerves, Biden proposes higher tariffs on Chinese imports

This week, President Biden announced a plan to more than triple tariffs on Chinese aluminum and steel products. As stated in our recent special report, tariffs are often imposed to promote demand for local products and spur domestic production, but the effects of tariffs on Chinese-imported goods have been marginal for U.S. industrial production over the past six years. Will the same hold true with Biden's proposed policy?

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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.