United States: Let's wait and see

Wells Fargo Research Team Wells Fargo

Summary

United States: Let's wait and see

There was no shortage of economic data this week, but little did much to change the macro landscape. The April inflation data were a step in the right direction, and if sustained, we see the first rate cut coming in September.
Next week: Existing Home Sales (Wed.), New Home Sales (Thu.), Durable Goods (Fri.)

International: Mixed data from foreign economies

In this week's data, U.K. wage growth surprised to the upside, but the underlying details were a bit more encouraging; we maintain our outlook for an initial Bank of England rate cut in August. Japan's GDP contracted more than expected, by 2.0% quarter-over-quarter annualized. Swedish CPI inflation continued its journey back to target, affirming the central bank's decision to ease monetary policy last week. In China, industrial output firmed while retail sales softened, and in India, CPI inflation slowed by less than expected.
Next week: Canada CPI (Tue.), U.K. CPI and PMIs (Wed. & Thu.), Chilean Central Bank Policy Rate (Thu.)

Interest rate watch: Fed rate cuts back on the table?

Market participants have significantly dialed back their expectations of the total amount of Fed easing this year, but recent data keep a 25 bps rate cut at the September meeting in play.

Credit market insights: Are businesses still managing their debt?

Like the mighty consumer, who has steadfastly supported the U.S. economy over this cycle but appears poised to slow spending as the year progresses, businesses remain on firm footing but show signs of weakness ahead—notably a steep increase in business bankruptcies over the past year.

Topic of the week: Biden expands higher tariffs on Chinese imports

President Biden announced a modification of tariff rates on a selection of U.S. imports from China, including batteries, electric vehicles, semiconductors and solar panels. How much of these goods does the United States import from China?

Download the Full Report!

Author

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.