Weekly economic commentary: Tariff policy remains yop of mind

Wells Fargo Research Team Wells Fargo

Summary

United States: They say waiting is the hardest part

Next week should bring clarity about details of tariff policies. Economic data released this week are shaping up in an ugly way for Q1. Advance goods trade data combined with only a modest rebound in February consumer spending put growth on track for the weakest quarterly print in two-and-a-half years. It's unclear if this can all be chalked up to “temporary” tariff effects.
Next week: ISM Manufacturing & Services (Tue. & Thu.), Trade Balance (Thu.), Employment (Fri.)

International: Tariff policy remains top of mind

Tariffs are a major influence over the global economic, policy and FX outlook. While our global GDP forecast is unchanged, tariff sensitivity is affecting economies around the world. At the same time, FX markets seem somewhat immune to tariffs, at least for now. Could that change on reciprocal tariff day? Time will tell.
Next week: Colombia Central Bank (Mon.), Eurozone Inflation (Tue.), April 2 Tariff Deadline (Wed.)

Credit market insights: You can't always get what you want: Consumers report worsening in credit access expectations

Last week, the Federal Reserve Bank of New York released the February 2025 Credit Access Survey. While overall credit demand has held up, a peek underneath the hood reveals an increasing share of consumers that are becoming discouraged from applying for credit. Expectations about credit conditions in the future also appear to be souring.

Topic of the week: Livin' La auto local: US announces auto tariffs

The U.S. auto industry, yet to fully recover from the pandemic, is facing renewed headwinds due to the prospect of a trade war on the horizon. This week, the Trump administration unveiled plans to enact 25% tariffs on motor vehicle and part imports to the United States.

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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.