FOMC likely on hold until summer

Wells Fargo Research Team Wells Fargo

Summary

United States: The equinox and the struggle to find balance

Spring is a time for new beginnings, and we see fresh possibility in some of this week's less-than-stellar data. It may eventually help bring the needed balance into place to get inflation closer to the FOMC's target.
Next week: Housing Starts (Tue.), Existing Home Sales (Thu.)

International: Latin America disinflation is stalling

While nations across Latin America have made impressive progress in their battles against inflation, regional disinflation hit a few speed bumps this week that could disrupt rate cut cycles.
Next week: Bank of Japan (Tue.), Bank of England (Thu.), Central Bank of Mexico (Thu.)

Interest rate watch: FOMC likely on hold until summer

Very few observers, ourselves included, look for a policy change at next week's FOMC meeting. Indeed, recent data have reduced the odds that the Committee will cut rates at its next meeting on May 1. Accordingly, we have pushed out our expectation of the commencement of the easing cycle to June 12.

Topic of the week: Consumer expectations deteriorate for lower income cohorts

Earlier this week, the New York Fed released the February update to its Survey of Consumer Expectations (SCE). The recent update depicts lower income consumers as increasingly uncertain amid broader signs of the labor market softening.

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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.