Consumers pull back as Covid continues to surge

Wells Fargo Research Team Wells Fargo

U.S. Review

Consumers Pull Back as COVID Continues to Surge

Retail sales fell 0.7% in December, the third straight monthly decline. Sales are still up 2.9% over the year, however.
The CPI advanced 0.4% in December (1.4% over the year). Inflation remains tepid, with core prices up 0.1% in the month.
Initial jobless claims jumped to 965K (week end Jan. 9).
Several Fed officials pushed back on the idea of a shift in monetary policy anytime soon.
Industrial production rose 1.6%inDecember.
Small business optimism (NFIB)dropped to 95.9 in December. Consumer sentiment (U. Michigan) slipped to 79.2 in January.

Global Review

International Data Mixed Over the Week

Brazilian inflation surprised to the upside in December, rising 4.5% year-over-year. Brazil’s inflation has been steadily increasing since May amid lower interest rates, additional fiscal spending and a weaker exchange rate.

Norwegian mainland output fell less than expected in November, suggesting risks to our Q4 GDP growth forecast are tilted toward the upside. Meanwhile, Norway’s inflation recovered in line with consensus estimates in December.

Elsewhere, Peru’s central bank opted to continue its expansionary policy stance, holding its reference rate at 0.25% and indicated it is ready to increase stimulus if needed.

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.