Ground control to Major Powell: Odds of soft landing rising

Wells Fargo Research Team Wells Fargo

United States: Ground control to Major Powell: Odds of soft landing rising

Economic data continued to beat expectations this week. Real GDP came in at a stronger-than-expected 2.4% annualized rate in Q2. Inflation and compensation costs have decelerated; yet, we suspect the FOMC would like to see continued moderation before it concludes that inflation is sufficiently low and stable.
Next week: Construction Spending (Tue.), ISM Indices (Tue. & Thu.), Employment (Fri.)

International: European central bank raises interest rates; Bank of Japan tweaks monetary policy

The European Central Bank (ECB) raised its Deposit Rate 25 bps to 3.75% at this week's policy announcement, but was cautious in offering any guidance about policy beyond this July meeting. We expect the ECB to hold rates steady for an extended period in September and beyond, and do not see the ECB easing monetary policy until Q2-2024. The Bank of Japan tweaked its monetary policy stance in a hawkish direction, saying it would allow 10-year Japanese Government Bond Yields to rise flexibly to somewhere between 0.50% and 1.00%.
Next week: China PMIs (Mon.), Reserve Bank of Australia Policy Rate (Tue.), Bank of England Policy Rate (Thu.)

Interest Rate Watch: Fed hikes and keeps its options open

The Federal Open Market Committee hiked the federal funds rate by 25 bps at its July monetary policy meeting. The post-meeting communication was little changed from June as the committee keeps its options open regarding additional tightening.

Topic of the week: Summer strife

A string of labor disputes have put union activity and workers' bargaining power front and center. The willingness to strike reflects the tight state of the labor market as well as decades-high inflation. With union compensation growth lagging behind inflation and non-union pay over the past few years, the push appears to be more catch-up than a canary of future wage trends.

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Wells Fargo Research Team

Wells Fargo

AUD/USD sticks to positive bias above 0.7100; lacks bullish conviction

AUD/USD trades with a positive bias for the second straight day, holding above 0.7100 in the Asian session on Friday as softer US bond yields keep US Dollar bulls on the back foot. Furthermore, hawkish RBA Governor Bullock's comments boost rate hike bets and support the Aussie. However, the Fed's hawkish outlook, along with geopolitical uncertainties, limits USD losses and caps the pair.

USD/JPY approaches 158.00 as Japanese Yen resumes decline

USD/JPY is resuming its upside in the European session on Friday, refreshing two-week highs and nearing 158.00. The Japanese Yen extends losses, despite the Bank of Japan's (BoJ) expected rate hike to 1.25% and hawkish Governor Ueda's comments, as two surprise dissents against the rate hike weigh on it.

Gold keeps the bid tone in place; still below $4,400

Gold adds to the optimism seen in the second half of the week, trading with decent gains just below the $4,400 mark per troy ounce on Friday. The precious metal’s advance finds traction in declining crude oil prices and fresh selling pressure on the US Dollar.

Why altcoin season isn't coming back — and what stole its capital

If, after two years of being frozen in ice, Katara and Sokka woke you up to the crypto market, it would seem like 100 years have passed. With Bitcoin soaring to record highs just over a year ago, everyone expected a routine altcoin season, where investors take profits from the top crypto to chase higher returns in altcoins.

BoJ Recap: Not as hawkish as expected

The BoJ raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks. Governor Kazuo Ueda said the policy phase had changed.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.