Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Homes Out of Range

Chair Powell delivered a distinctively dovish speech this week at Jackson Hole. Elsewhere, a slew of housing data revealed that, although green shoots are sprouting, affordability issues continue to constrain the housing market. Meanwhile, another decline in the Leading Economic Index was a reminder that recession risks lie ahead.
Next week: Durable Goods (Mon.), Personal Income & Spending (Fri.)

International: Adjusting Our Foreign Central Bank & U.S. Dollar Outlook

We published our August International Economic Outlook report this week and made some notable adjustments to our forecasts. More specifically, with the Fed likely on track to cut interest rates in September, we believe select foreign central banks can also either cut more aggressively or initiate easing cycles. In addition, as we see the Fed front-loading its easing, we have also adjusted our U.S. dollar outlook to see a stable-to-stronger greenback over the second half of 2025.
Next week: Canada GDP (Fri.), Eurozone CPI (Fri.), India GDP (Fri.)

Interest Rate Watch: Powell: "The Time Has Come for Policy to Adjust"

In a widely anticipated speech in Jackson Hole, Wyo., today, the Fed Chair signaled that the FOMC will be cutting rates at its next meeting on Sept. 18. The question is 25 bps or 50 bps?

Credit Market Insights: What Is Driving the Growth in Bankruptcy Filings?

The rate of businesses filing for bankruptcy has picked up significantly in 2024 and is currently at its highest level since the global financial crisis. What is driving this growth in business bankruptcy, and is it something we should be alarmed about?

Topic of the Week: What a Downward Revision of 818K Jobs Means for the Labor Market

The preliminary estimate for the 2024 benchmark revision to nonfarm payrolls (NFP) announced this week indicates the level of employment in March 2024 will be revised downward by 818K come the official annual benchmark in early 2025. The announcement was in line with expectations (including ours) for a large negative revision; so, what have we learned from the preliminary benchmark and the data that informed it?

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Wells Fargo Research Team

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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.