Weekly economic commentary: The search for clues continues

Wells Fargo Research Team Wells Fargo

Summary

United States: The search for clues continues

Fed watchers are still on the lookout for clues on the size of the well-telegraphed September rate cut. This week's economic indicator lineup, which broadly beat expectations and reaffirmed a soft landing, provides limited insight. Next Friday's employment report will go a long way toward determining the actions taken by the FOMC at next month's meeting.
Next week: ISM Manufacturing & Services (Tue. & Thu.), Employment (Fri.)

International: Eyes on global monetary policy decisions ahead as summer comes to a close

It was a relatively light week for global economic data releases. Eurozone headline inflation slowed, while services price pressures remained persistent in August; we maintain our view for gradual European Central Bank rate cuts. A slight upside surprise in Australia inflation in July should keep RBA policymakers on hold until next year, in our view. Both Canada and Sweden released GDP reports that we view as consistent with a steady pace of rate cuts from the Bank of Canada and Riksbank through the end of 2024.
Next week: China PMIs (Sat.), Bank of Canada Rate Decision (Wed.), Japan Labor Cash Earnings (Thu.)

Topic of the week: That chill in the air means college football is upon us

Summer is winding down and fall is just around the corner. Before the leaves change color, temperatures dip and pumpkin spice finds its way into everything, what better way to mark the transition into autumn than to dive deep into the college football season and the regional economies the top teams call home?

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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.