Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Proceed with Caution

It was yet another busy week for the U.S. economy, and eyes are on all data prints as the FOMC's September meeting looms closer. An underlying theme in recent prints of economic data has been to proceed with caution. Amid a softening labor market, strengthening inflation, tariff uncertainty and potential changes to the FOMC, it is more difficult than usual to gauge future economic risks.
Next week: ISM Manufacturing (Tue.), ISM Services (Thur.), Employment (Fri.)

International: Soft Spots and Strong Prints in Global GDP Data

This week’s Q2 GDP releases highlighted diverging global growth outcomes. Canada’s GDP disappointed, while Switzerland’s Q2 GDP softened, in line with expectations. On the flip side, Sweden and India posted stronger-than-expected growth, while on the price front, Australian inflation surprised to the upside.
Next week: China PMIs (Sun.), Australia GDP (Wed.), Japan Labor Cash Earnings (Fri.)

Interest Rate Watch: Loud Fed Headlines, Quiet Markets

Markets showed a muted reaction to President Trump's dismissal of Federal Reserve Governor Lisa Cook this week. The effort is not expected to change the near-term course of monetary policy, but risks protracting the FOMC's ongoing battle to return inflation to its 2% target.

Credit Market Insights: Banks Report Further Tightening in Lending

The recently released Q2 SLOOS report found that U.S. banks continued to tighten lending standards across most business and household loan categories. Demand for loans generally weakened, while lending standards remained on the tighter end of historical ranges.

Topic of the Week: The State of Agriculture

Farmers and ranchers appear to be on solid financial ground at present, bolstered by firm livestock cash receipts, a modest reduction in expenses and increased government support from the 2025 Farm Bill. Looking ahead, a less restrictive stance of monetary policy should help reduce financing costs for agricultural borrowers.

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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.