• The euro eased on Wednesday to take a breather from a rally prompted by optimism over the euro zone’s economy and expectations the European Central Bank will wind down its bond-buying stimulus in 2018.
The euro slipped 0.1 percent to $1.2048 EUR=. The currency hit a four-month high of $1.2081 on Tuesday, marking a gain of roughly 3 percent from a mid-December trough and bringing it close to a September high of $1.2092, the currency's highest level since early 2015.
The dollar index against a basket of six major currencies held steady at 91.902 .DXY, having pulled up from Tuesday’s 3-1/2 month low of 91.751.
• China’s yuan eased against the U.S. dollar on Wednesday after the central bank set the daily midpoint at its strongest level in 20 months, prompting a rush of dollar buying by corporates.
Prior to market opening on Wednesday, the People's Bank of China (PBOC) set its official yuan midpoint CNY=PBOC at 6.4920 per dollar, breaching the key threshold 6.5 per dollar level.
• North Korea reopened a long-closed border hotline with South Korea on Wednesday, hours after U.S. President Donald Trump appeared to mock the North’s leader by saying he has a “bigger and more powerful” nuclear button than he does.
• After a year of double-digit returns, one of the key questions for emerging markets in 2018 is whether they will continue to be insulated from one another’s crises.
Contagion, an intrinsic feature of the sector for years, shrank to such an extent that an almost 10 percent drop in Brazil’s currency in a single day in May had little effect on its emerging market peers.
Was that proof investors now treat individual emerging markets on their own merits, rather than as members of a homogenous poor and crisis-prone bloc? Or was it just a function of central bank money-printing and near-zero interest rates?
Not too long ago, a selloff like that of Brazil's real currency BRL= on May 18 last year would have sent central banks in distant Asia and Africa scrabbling to defend their markets via interest rate rises or dollar sales.
Instead, its Latin American neighbor Chile cut interest rates with little weakening in its currency, CLP= while in the Middle East, Oman announced plans for a dollar bond.
• Britain is interested in joining the Trans-Pacific Partnership trade bloc after it leaves the European Union, the Financial Times newspaper said.
The FT said that Britain had started informal talks about joining the bloc in a bid to boost post-Brexit exports. Although the United States pulled out of the talks to form the bloc nearly a year ago, other TPP countries have pledged to move forward with plans for a trade group.
• Oil prices were stable on Wednesday, not far off mid-2015 highs reached the previous session, as strong demand and ongoing efforts led by OPEC and Russia to curb production tightened the market.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were at $60.40 a barrel at 0141 GMT, up 3 cents from their last close, and not far off the$60.74 June 2015 high reached the previous day.
Brent crude futures LCOc1 - the international benchmark for oil prices - were at $66.55 a barrel, down 2 cents but still not far off the $67.29 May2015 high from the previous day.
Reference: Reuters, CNBC
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