Weekly Economic & Financial Commentary

Wells Fargo Research Team Wells Fargo

U.S. Review

Economic Data Offer Mixed Signals

Industrial production, a key barometer for the manufacturing sector, jumped 1.o percent in April, surpassing expectations for a more modest increase. The positive print for industrial production was accompanied by mixed results in the survey data, however, as the New York Empire State factory index slumped into contraction territory in May, while the Philly Fed index soared higher.
Housing starts missed in April, declining 2.6 percent to a 1.172 million-unit annualized rate. The pullback was entirely driven by weakness in multifamily, which dwarfed a slight pickup in single-family starts. We continue to expect residential construction to be driven by growth in single-family housing.

Global Review

Longest Growth Stretch in 11 Years in Japan

 Five straight quarters of growth. It may not sound like much, but as the chart at right shows, uninterrupted growth in Japan has been difficult to achieve. We break down the details in this week’s Global Review on page 4.
 Other global economic highlights featured this week include a look at inflation dynamics in the United Kingdom and Canada as well as what is driving the remarkably strong growth in Australian jobs.

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Wells Fargo Research Team

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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.