September Inflation Keeps Fed on Track

Wells Fargo Research Team Wells Fargo

U.S. Review

September Inflation Keeps Fed on Track

While most of the fresh September inflation data came in more or less as we had expected, higher oil prices and recently enacted tariffs have caused us to increase our outlook for inflation.
Due to the nature of the increase stemming from a one-time upward level shift in prices, we still see the Fed on track to raise rates once a quarter through Q3-2019.
Producer prices rose 0.2%, while consumer prices were up a more modest 0.1%. A surge in petroleum prices caused import prices to rise 0.5% in September.

Global Review

Global Growth Slightly Weaker Despite U.S. Strength

In what was a relatively quiet week for international economic data, the International Monetary Fund (IMF) released its biannual World Economic Outlook.
The IMF noted a theme we have highlighted in numerous recent reports: global growth has been a bit softer-thanexpected this year despite a robust showing from the United States.
Encouragingly, the economic data of late have been a bit better out of some advanced economies, such as the United Kingdom, while despite the troubles in emerging markets there are some bright spots there as well, such as robust growth in India.

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.