Powell Promises to “Act as Appropriate”

Wells Fargo Research Team Wells Fargo

U.S. Review - Powell Promises to “Act as Appropriate”

Fed Chair Powell emphasized that the FOMC would “act as appropriate” in the face of slower global growth and an ongoing trade war, which escalated further as China announced plans to impose additional tariffs on $75 billion of U.S. goods.

Lower mortgage rates continue to provide the housing market a modest lift. Existing home sales rose 2.5% during July. New home sales dipped 12.8%, but fell from the strongest pace of the cycle in June.

The Leading Economic Index (LEI) increased 0.5% during July, which should calm fears of an impending downturn.

Global Review - Trade Tensions Escalate; PMIs Send Mixed Messages

China announced plans to retaliate against the United States for additional tariffs. These plans include a 5% tariff on crude oil and agriculture imports from the U.S., while also re-imposing a 25% tariff on autos. In response, equity markets sold off, while the Chinese renminbi approached a new low against the U.S. dollar.

Sentiment data released this week were rather mixed. In the Eurozone, the manufacturing and services PMI improved slightly, although we still believe the ECB will look to ease monetary policy. In Japan, manufacturing and services PMIs rose, further signaling a strengthening Japanese economy.

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Wells Fargo Research Team

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EUR/USD hits two-day highs near 1.1820

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