Weekly economic & financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: December Rate Cut, Options Left Open for January

The FOMC lowered the fed funds rate 25 bps at its December meeting and left its options open for January as the Committee weighs incoming data with a wide dispersion of views. Data out this week continue to show the labor market losing steam, supporting the case for returning monetary policy to a neutral stance.
Next week: Employment (Tue.), Retail Sales (Tue.), CPI (Thu.)

International: Global Central Banks Holding Steady

In contrast to the FOMC’s rate cut, most global policymakers played it cool in a jam-packed week of central bank decisions, opting to hold steady. The Bank of Canada, Reserve Bank of Australia, Swiss National Bank and Brazilian Central Bank all kept policy rates unchanged. Meanwhile, outside the rate-setting arena, Mexico’s inflation surprised to the upside.
Next week: China Industrial Production and Retail Sales (Mon.), Bank of England Policy Rate (Thu.), European Central Bank (Thu.)

Topic of the Week: A Cut to Close Out the Year

The December FOMC meeting included the latest Summary of Economic Projections. Despite dissents and a hawkish tilt to the dot plot, the Committee maintains an easing bias.

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Wells Fargo Research Team

Wells Fargo

EUR/USD looks firm well above 1.1600

EUR/USD picked up a bid on Monday, pushing up toward the 1.1650 area in response to fresh weakness around the US Dollar, all following President Trump threats to escalate tariffs on eight European countries opposing his proposal to take Greenland. With US stock and bond markets closed for Martin Luther King Jr. Day, liquidity is likely to be thin.

GBP/USD reclaims 1.3400 and above

GBP/USD found its footing after a soft start to the week, edging slightly above 1.3400 on Monday. The Btitish Pound benefits from a weaker Greenback, as markets react to President Trump’s latest tariff threats against Europe over Greenland.

Gold targets $4,700 on broad USD selling

Gold attracts strong buying interest at the start of the week, surging to a fresh record high near $4,700 per troy ounce. Markets turned more cautious after US President Trump threatened tariffs on eight European countries opposing his plan to acquire Greenland, a shift that helped support the precious metal.

Dogecoin, Shiba Inu, Pepe in a freefall, echoing Bitcoin’s drop

Meme coins, such as Dogecoin, Shiba Inu, and Pepe, extend the decline from last week, with a roughly 3% drop on Monday. The meme coins trade below the crucial moving averages, aiming for the immediate support to potentially reset the momentum.

When tariffs become ammunition and capital becomes the battlefield

Markets opened the week like a risk engine hitting a pothole at speed. Equities stepped back, gold vaulted to fresh highs, Treasuries caught a bid, and the dollar, outside of havens, took on a soft bid. This was not a data-driven wobble or a valuation purge.