· The dollar rose to a nearly three-week high against a basket of major currencies on Tuesday, as investors awaited clues from the Federal Reserve on its outlook for the U.S. economy and how many interest rate increases it may embark on in 2018.
An index tracking the greenback versus a basket of six currencies rose 0.613 points or 0.68 percent, to 90.378. Earlier in the session it hit a high of 90.397, its highest since March 1.
The greenback was last up 0.35 percent, at 106.45 yen after touching a nearly one-week peak at 106.60 yen.
· The euro retreated on a sharp drop in confidence among German investors in March according to a ZEW research institute survey. The single currency was last down 0.68 percent, at $1.2249.
Following the release of the German ZEW economic surveys, the ZEW is out with their thoughts on the German and Eurozone economic outlook.
Key Points: Concerns over the US-led global trade conflict have made German investors more cautious. Strong Euro is also hampering economic outlook for Germany. However, the outlook for German economy is still largely positive despite risks.
· The futures market implied traders widely expected Fed policymakers would raise key borrowing costs by a quarter point to a target range of 1.50 percent to 1.75 percent after the conclusion of a two-day meeting on Wednesday.
Investors will watch for new quarterly forecasts from Fed officials due at 2 p.m. (1800 GMT) on Wednesday, followed by a press conference from Jerome Powell, his first as Fed chief.
Market participants will track the Fed’s economic projections for clues to a possible fourth rate hike this year, analysts said.
· The Fed bets kept long-term U.S. bond yields edging higher, with short-dated yields up too.
The yield on 10-year Treasuries was up at almost 2.89 percent US10YT=RR, 6 basis points below the four-year high of 2.957 percent touched a month ago. Two-year notes US2YT=RR hit a 9-1/2-year high of 2.33 percent.
· U.S. Treasury Secretary Steven Mnuchin said on Tuesday that U.S. tariff actions are “not about protectionism” but about defending American interests against unfair trade practices.
· The U.S. Senate on Tuesday killed a resolution seeking an end to U.S. support for Saudi Arabia’s campaign in Yemen’s civil war, the same day President Donald Trump was due to meet with Saudi Crown Prince Mohammed bin Salman at the White House.
· U.S. President Donald Trump gave a warm welcome to Saudi Arabia’s powerful Crown Prince Mohammed bin Salman on Tuesday and credited U.S. defense sales to the Saudis with boosting American jobs, even as Riyadh’s involvement in Yemen’s civil war faced criticism.
In the Oval Office, Trump and the crown prince praised the strength of U.S.-Saudi ties, which had grown strained under the Obama administration in part over differing views toward Riyadh’s regional rival, Iran.
· President Donald Trump on Tuesday congratulated Russian President Vladimir Putin on his re-election and said they would likely meet soon as relations between the two countries grow more strained over allegations of Russian meddling in the U.S. electoral system.
· The world’s financial leaders rejected protectionism on Tuesday and urged “further dialogue” on trade, but failed to diffuse the threat of a trade war days before U.S. metals tariffs take effect and Washington is to announce measures against China.
Two officials briefed on the matter said U.S. President Donald Trump would also unveil tariffs on up to $60 billion in Chinese technology and telecoms products by Friday, a move stemming from Beijing’s intellectual property practices.
· Japan’s calls to add a warning against recent market volatility were reflected in the G20 finance leaders’ communique, its vice finance minister said in a sign of Tokyo’s concern over the risk of another yen spike that could hurt an export-reliant economy.
In their communique issued after a meeting on Tuesday, Group of 20 finance leaders said “recent market volatility despite sound fundamentals of the global economy is a reminder of risks and vulnerabilities” of markets to sudden, shock events.
· The European Commission will propose rules on Wednesday designed to make digital companies pay their fair share of tax and set to hit U.S. tech giants such as Google and Facebook.
· The Commission is expected to propose that companies with significant digital revenues in Europe pay a 3 percent tax on their turnover, according to a draft seen by Reuters last week.
If backed by EU states and lawmakers, whose support is far from certain, the tax would apply to large firms with annual worldwide revenue above 750 million euros ($919 million) and annual “taxable” EU revenues above 50million euros.
· Europe’s largest development bank, the EIB, could increase its share of the European Union budget from three to five percent, to help offset a gap caused by the departure of Britain from the bloc, the Sueddeutsche Zeitung newspaper reported on Wednesday.
Alexander Stubb, vice president of the European Investment Bank, told the paper the two percentage point increase would boost the bank’s yearly contribution by 3 billion euros to around 7.8 billion euros.
· Oil prices climbed to their highest level in three weeks on Tuesday as tension in the Middle East and the possibility of further falls in Venezuelan output helped offset the impact of growing U.S. crude production.
Brent crude LCOc1 futures for May delivery rose $1.37 to $67.42 a barrel, a 2.07 percent gain. The global benchmark rose to $67.88 during the session, its highest level since late February.
U.S. West Texas Intermediate (WTI) crude CLc1 futures for April delivery rose $1.34 to settle at $63.40 a barrel, a 2.2 percent gain. WTI traded between $62.08 and $63.81.
Reference: Reuters, FXStreet
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