• The dollar edged higher on Wednesday after three straight days of losses, as investors booked profits on their short currency bets, but the outlook remained murky amid political uncertainty in the Trump administration and renewed worries about trade wars.
• U.S. President Donald Trump’s firing of U.S. Secretary of State Rex Tillerson on Tuesday, a week after the resignation of U.S. economic adviser Gary Cohn, has underscored an uncertain environment in the administration that is sure to scare away top-level talent, analysts said.
Apart from the political revolving door in Trump’s cabinet, investors grew concerned again about increased protectionism in his government.
• On the economic front, U.S. retail sales data on Wednesday did not really help the dollar. Retail sales fell, offsetting a stronger-than-forecast rise in domestic producer prices last month.
• That should further prompt the Federal Reserve to raise interest rates at a gradual pace. The market still expects the Fed to raise rates three times this year, starting at next week’s monetary policy meeting.
• In mid-afternoon trading, the dollar index was up 0.1 percent at 89.73, within striking distance of a one-month low of 89.40.
• Against the yen, the dollar was down 0.3 percent at 106.29, , having slipped overnight from a two-week high as caution over a political controversy in Japan waned slightly.
• Elsewhere, the euro hit the day's lows after European Central Bank President Mario Draghi struck a dovish tone in his speech. It was last down 0.2 percent at $1.2369 EUR=.Draghi said the ECB needs further evidence that inflation is rising towards its target but is growing more confident it is on track to do so.
• Differences over how to deal with North Korea’s nuclear challenge were a key factor in President Donald Trump’s decision to replace Rex Tillerson as U.S. secretary of state, according to sources familiar with the internal deliberations.
• Tillerson had been an early advocate of talks with North Korea to the annoyance of Trump, who wanted to keep applying maximum pressure on Pyongyang before responding to an invitation to meet North Korean leader Kim Jong Un, the sources said.
That had led to fear that Tillerson might be too willing to make concessions to North Korea, the sources said.
• U.S. television commentator and conservative economic analyst Larry Kudlow will replace Gary Cohn as President Donald Trump’s top economic adviser, the White House and Kudlow said on Wednesday, adding another loyalist to Trump’s inner circle.
“Larry Kudlow is very much a free trader,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco. “This shows that (Trump) wants to hear the other side of the argument as well.”
• Economic commentator Larry Kudlow, tapped by President Donald Trump to be his top economic adviser, said on Wednesday that a strong and stable dollar was important for U.S. economic health and that he had no reason to believe Trump disagreed.
China can expect the U.S. to take a tough stance when it comes to international trade, Larry Kudlow, the newly appointed director of the National Economic Council, said Wednesday.
• U.S. Republican lawmakers said on Wednesday they would vote on their report on the House Intelligence Committee’s investigation of Russia and the 2016 U.S. election just 10 days after announcing they were wrapping up the probe.
• The U.S. Senate voted 67 to 31 on Wednesday to ease bank rules, bringing Congress a step closer to passing the first rewrite of the Dodd-Frank reform law enacted after the 2007-2009 global financial crisis.
The measure marks the first significant rewrite of financial rules since the passage of the 2010 Dodd-Frank financial reform law. The White House said in a statement that President Donald Trump would sign the bill into law if approved by the House.
• Canadian Prime Minister Justin Trudeau said on Wednesday that he was “very optimistic” of a successful result for his country, the United States and Mexico as they renegotiate the North American Free Trade Agreement.
• Next week’s G20 meeting of finance ministers and central bank governors from the world’s 20 biggest economies will call for stronger monitoring of crypto-currencies while also assessing the need for a multilateral response to any international financial stability threats, reports Reuters.
• Oil prices gained 0.4 percent in choppy trade on Wednesday, after a report showing a bigger-than-expected U.S. crude stock build was offset by large distillate and gasoline inventory draws.
Brent crude oil futures LCOc1 were up 25 cents, or 0.4 percent, to settle at $64.89 per barrel. U.S. West Texas Intermediate (WTI) futures CLc1 also gained 25 cents, to settle at $60.96 per barrel.
• U.S. crude stocks rose by 5 million barrels, the biggest jump since late January, the U.S. Energy Information Administration (EIA) said. Expectations had been for a2 million barrel build. But there was a larger-than-expected draw on fuel stocks.
Reference: Reuters, Asia Times, CNBC
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