Was April the bottom?

Wells Fargo Research Team Wells Fargo

U.S. Review

Was April the Bottom?

Data this week continued to suggest the U.S. economy hit rock bottom in April. Still, it is a long road to recovery and the pick- up in economic activity will be gradual.
In what was a surprising jobs report, the U.S. labor market added 2.5 million jobs in May and the unemployment rate fell to 13.3%. The bottom line: hiring started to pick-up earlier than expected as states began to loosen restrictions in May.
Survey evidence from the ISM further supports the notion that economic activity has bottomed, as does mobility data, though they exemplify just how gradual the rebound may be.

Global Review

Trio of Central Bank Meetings Dominate the Week

There was a trio of key central bank meetings this week, with the Reserve Bank of Australia (RBA) kicking the week off. As expected, the RBA maintained its main policy rate and target for the three-year sovereign bond yield.
The European Central Bank increased the Pandemic Emergency Purchase Program by €600 billion, extended the timeline for purchases to June 2021 and announced maturing holdings would be reinvested until at least the end of 2022.
The Bank of Canada left its main policy rate unchanged and modestly scaled back some provisions aimed at providing liquidity in financial markets.

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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.