Weekly economic and financial commentary: Data delayed, decisions loom

Wells Fargo Research Team Wells Fargo

Summary

United States: Data delayed, decisions loom

The federal government shutdown continues to delay economic data releases, including international trade and jobless claims this week. That said, the September Consumer Price Index is now expected to be published before the end of the month, just in time for the FOMC's next meeting.

Next week: CPI (Wed.), Retail Sales (Thu.), Industrial Production (Fri.)

International: Global economy: Stabilizing or stalling?

This week brought a mix of data releases from foreign economies. Japan’s wage growth slowed more than expected, while Canada’s labor market showed signs of stabilization. On the monetary policy front, the Reserve Bank of New Zealand cut its policy rate by 50 bps. And finally, in emerging markets, inflation in both Mexico and Brazil picked up.

Next week: Australia Employment (Wed.), U.K. Monthly GDP (Thu.)

Topic of the week: Seeing the forest for the trees

New tariffs on imported wood products, which include softwood lumber, furniture and cabinets take effect on Oct. 14. We expect them to leave the overall U.S. average effective tariff rate unchanged at 18%. While the impact on consumer spending may be limited, construction costs could be pressured by new lumber tariffs.

Download the full Weekly Economic and Financial Commentary

Author

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.