Weekly economic and financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Fed Still Poised to Cut as Inflation Data Show Only Modest Gain

The fire is not out for inflation, but the 0.2% rise in core CPI in September was the smallest in three months and keeps the Federal Reserve on track to deliver another 25 bps rate cut at its meeting this coming Wednesday. There were also signs of life in the existing home sales market this week.
Next week: Consumer Confidence (Tue.), FOMC Meeting (Wed.)

International: Global Inflation Pressures and Emerging Resilience

China’s Q3 GDP growth slowed but still exceeded expectations, rising 4.8% year-over-year, while several countries—including Canada, New Zealand and Japan—reported higher inflation readings this week. The UK was a notable exception, with inflation cooling. Meanwhile, PMI data from both the Eurozone and the UK surprised to the upside, pointing to a modest pickup in economic momentum heading into the final quarter of the year.
Next week: Bank of Canada (Wed.), Bank of Japan (Thu.), European Central Bank (Thu.)

Topic of the Week: Crude Oil Pops Under Sanction Pressure

The U.S. expanded sanctions on Russian oil firms this week, while maintaining hiked tariffs on Indian goods in an effort to pressure Moscow’s key export partner. Despite the spike in oil prices, elevated OPEC production and softer global demand point to continued easing in energy inflation into year-end.

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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.