Weekly Economic & Financial Commentary: Economic Data Reinforce Fed Patience

Wells Fargo Research Team Wells Fargo

U.S. Review Economic

Data Reinforce Fed Patience

Several indicators released this week signaled a moderation in the pace of economic growth, and provided further reinforcement for patience from the Fed on further monetary policy tightening.
Retail sales rebounded in January, but the gain wasn’t enough to completely wash out the weak readings in December, suggesting a slow start to the year for consumer spending.
Prices continue to increase only modestly, and with core inflation measures at or near the Fed’s target of 2%, increased risk of a break-out to the upside remains limited.

Global Review Still Slow

Going for Global Growth

This week’s economic news remained consistent with the narrative of a slow-motion global expansion. Chinese activity data for early 2019 were mildly soft in tone, while Japan’s activity data were also subdued overall. Q4-GDP figures for the G20 were released and showed that outside of the United States, international economic growth remains on a steadily slowing trend
U.K. GDP jumped in January, reversing its December fall, but it is unclear how long that growth pace will persist. The U.K. parliament voted this week to delay the Brexit date, extending uncertainty and likely pushing back Bank of England hikes. Inside U.S. Review 2 U.S. Outlook 3 Global Review 4 Global Outlook 5 Point of View 6 Topic of the Week 7 Market Data 8 Source: Federal Reserve Board, IHS Markit, U.S. Department of Commerce, U.S. Department of Labor and Wells Fargo Securities

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Wells Fargo Research Team

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EUR/USD trims gains, hovers around 1.1900 post-US data

EUR/USD trades slightly on the back foot around the 1.1900 region in a context dominated by the resurgence of some buying interest around the US Dollar on turnaround Tuesday. Looking at the US docket, Retail Sales disappointed expectations in December, while the ADP 4-Week Average came in at 6.5K.

GBP/USD comes under pressure near 1.3680

The better tone in the Greenback hurts the risk-linked complex on Tuesday, prompting GBP/USD to set aside two consecutive days of gains and trade slightly on the defensive below the 1.3700 mark. Investors, in the meantime, keep their attention on key UK data due later in the week.

Gold loses some traction, still above $5,000

Gold faces some selling pressure on Tuesday, surrendering part of its recent two-day advance although managing to keep the trade above the $5,000 mark per troy ounce. The daily pullback in the precious metal comes in response to the modest rebound in the US Dollar, while declining US Treasury yields across the curve seem to limit the downside.

XRP holds $1.40 amid ETF inflows and stable derivatives market

Ripple trades under pressure, with immediate support at $1.40 holding at the time of writing on Tuesday. A recovery attempt from last week’s sell-off to $1.12 stalled at $1.54 on Friday, leading to limited price action between the current support and the resistance.

Dollar drops and stocks rally: The week of reckoning for US economic data

Following a sizeable move lower in US technology Stocks last week, we have witnessed a meaningful recovery unfold. The USD Index is in a concerning position; the monthly price continues to hold the south channel support.