Summary of macroeconomic forecasts

BNP Paribas Team BNP Paribas

In the US, economy, especially in the manufacturing sector, has shown some signs of weakness recently, prompting the US Federal Reserve to cut rates "preventively".

The materialization of US "trade war" through tariffs increases on worth $300bn of imports is likely to weigh on firms profitability, then activity.

The inverted yields curve is a bearish signal. It could be followed by sizeable downward adjustments in highly leveraged sectors such as energy and IT

As a consequence, the monetary policy would continue to ease.

The Euro area, growth is sharply decelerating, with some countries like Italy and Germany now close to recession.

Extra EU trade is less dynamic, in line with fading external demand, in particular coming from EMEs.

Inflation is expected to come-back near the 1pct level, as a consequence of falling oil prices.

The ECB has consequently restarted it Asset Purchases Program (APP) and plan to buy EUR20bn per month (net) over an indefinite period of time. The depo rate was cut to -0.5% and will stay there for long.

Download The Full EcoFlash

Author

BNP Paribas Team

BNP Paribas

BNP Paribas Economic Research Department is a worldwide function, part of Corporate and Investment Banking, at the service of both the Bank and its customers.

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.