Weekly Economic & Financial Commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Growth Concerns Rattle Markets During Relatively Quiet Week for Economic Data

Financial markets were jittery this week as uncertainty mounted around the new COVID variant hampering global activity and the growing idea that a lack of supply may prevent economic growth. We continue to believe that the drivers of economic recovery remain intact and project a robust above-consensus pace of growth into next year as supply problems ease.
Next week: Consumer Price Index (Tuesday), Industrial Production (Thursday), Retail Sales (Friday)

International: U.K. Calms Down but Still Carries On

U.K. May GDP figures pointed to an ongoing recovery, albeit at a slower pace, as the economy grew 0.8% month-over-month, with slower growth reported in both services and industrial activity. Meanwhile in Canada, after COVID restrictions crimped activity in recent months, June saw a rebound as employment jumped by 230,700.
Next week: Bank of Canada policy announcement (Wednesday), China GDP (Thursday), Australian employment (Thursday)

Interest Rate Watch: June FOMC Minutes Raise as Many Questions as Answers

Anyone looking for a higher degree of clarity on the path and timing for the Fed to remove its extraordinary policy accommodation was likely disappointed by this week's release of the June FOMC meeting minutes.

Credit Market Insights: What Happens When Forbearance Ends?

Since the beginning of the year, an average of 1.3 million adults have reported being at risk of foreclosure; meanwhile, federal forbearance protections are set to expire at the end of September.

Topic of the Week: Oil Prices in the Spotlight Amid OPEC+ Impasse

Talks last week among OPEC+ broke down as Saudi Arabia and the United Arab Emirates (UAE) failed to come to terms on how new production quotas should be calculated.

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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.