Weekly economic & financial commentary

Wells Fargo Research Team Wells Fargo

Summary

United States: Economic Growth Sturdy Ahead of the January FOMC

Davos delivered news of cooling trade tensions thanks to a deal for the U.S. to gain greater access to Greenland. Meanwhile, solid consumer spending during October and November despite slower income growth suggests economic growth remains on a positive trajectory.
Next week: Durable Goods (Mon.), FOMC Meeting (Wed.), Trade Balance (Thu.)

International: Cross-Currents Emerge in China's Economy

December activity put a brighter spotlight on how sluggish consumer activity has been, yet industrial production and manufacturing remain resilient across China’s economy. As these cross-currents persist and authorities offer little in terms of policy support, we expect the Chinese economy to soften relative to last year and for growth prospects to dwindle over time.
Next week: Bank of Canada Policy Rate (Wed.), Brazil Selic Rate (Wed.), Central Bank of Colombia Rate (Fri.)

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Wells Fargo Research Team

Wells Fargo

EUR/USD pops to yearly highs near 1.1770

EUR/USD rapidly reverses course and hits fresh YTD tops near 1.1780 at the end of the week. The pair’s U-turn comes on the back of the intense sell-off in the Greenback amid the generalised risk-on context.

GBP/USD climbs to four-month tops near 1.3600

GBP/USD is building on its solid weekly advance and is pushing toward the 1.3600 hurdle on Friday, or new four-month peaks. Cable’s strong move higher comes as the Greenback intensifies its decline, while auspicious results on the UK calendar also collaborate with the uptrend.

Gold picks up pace, approaches $5,000

Gold prices keep their uptrend well in place and gear up for an imminent hit to the key $5,000 mark per troy ounce on Friday. The yellow metal’s sharp advance gathers pace amid the increasing weakness in the US Dollar and mixed US Treasury yields across the curve.