Balance Sheet Plan Commences in October

Wells Fargo Research Team Wells Fargo

U.S. Review

Balance Sheet Plan Commences in October

The FOMC announced this week that it will start balance sheet normalization in October. The dot plot leaves open the possibility of another rate hike in 2017, but implies one less move in 2019. Officials also pushed out expectations to hit the 2 percent inflation target into 2019.
The economic calendar focused heavily on housing this week. The key takeaway was largely that the inventory shortage was already straining the market, and the outlook for alleviating that strain with new construction was limited by major storms damaging vital southern markets, repairs for which will likely take precedence in coming months.

Global Review

BoJ Chooses to Swim Against the Tightening Tide

Unlike many of the world’s other major central banks, the Bank of Japan (BoJ) showed no signs of turning off the stimulus spigot at its policy meeting this past week.
Eurozone purchasing manager indices signaled faster growth in September, as both the manufacturing and service sector measures rose.
The Canadian consumer price index showed signs of modest acceleration in August as headline and core measures were all in the ballpark of 1.5 percent year-over-year.

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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.