Weekly economic commentary: Mix of economic news and data from global economies

Wells Fargo Research Team Wells Fargo

Summary

United States: Hard to get a clear view on restless waters

Amid rising uncertainty, lagging indicators show activity was stable before the tariff storm. The number of job openings was slightly higher than anticipated at the end of January, and both the CPI and PPI came in softer than expected in February. Yet, we expect a mixture of weaker hiring and stronger inflation by midyear, which would present a challenge to the FOMC. We now look for the Committee to cut 75 bps, bringing the fed funds rate target range to 3.50%-3.75% by year-end.
Next week: Retail Sales (Mon.), Industrial Production (Tue.), FOMC (Wed.)

International: Mix of economic news and data from global economies

This week saw a variety of economic developments and data releases from G10 and emerging economies. The Bank of Canada lowered its policy rate by 25 bps this week to 2.75% and provided accompanying commentary that was somewhat mixed, but overall somewhat dovish-leaning, in our view. The U.K. economy unexpectedly shrank in January, early results from the spring wage negotiations in Japan look encouraging and Norway saw an upside inflation surprise. Brazil's monthly inflation data, while not coming in as a surprise, continued to point to elevated price pressures.
Next week: China Industrial Production and Retail Sales (Mon.), Bank of Japan Policy Rate (Wed.), Brazilian Central Bank Selic Rate (Wed.)

Credit market insights: Why have mortgage rates remained elevated?

Amid high mortgage rates, purchasing and refinancing applications remain suppressed from their earlier peaks. Even with the Federal Reserve's easing cycle being under way, mortgage rates remain high with upward pressure from the 10-year Treasury and mortgage spread.

Topic of the week: Steel yourself for a section 232 revival

This week, the 25% tariffs on steel and aluminum imports announced by the Trump administration last month went into effect. All imports of certain steel articles and derivative steel articles are subject to the 25% tariffs under Section 232, essentially eliminating the carve-outs to the original Section 232 tariffs enacted during President Trump's first term (with a few changes).

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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.