• The dollar recovered against the yen and Swiss franc on Wednesday, bolstered by a rebound on Wall Street, as investors turned less pessimistic about the impact of China’s move to slap tariffs on key U.S. imports in response to a similar measure from the United States.
• Some analysts said the trade tension may not have as severe an impact on the dollar as initially thought. And if it ends up having an impact, it could be either a positive or negative factor for the greenback.
“There is a scenario that is dollar positive in that maybe the current account deficit is reduced or the Fed raises rates,” Steven Englander, head of research and strategy at Rafiki Capital in New York, said.
“Normally that would be seen as dollar positive. But there is a dollar negative aspect in that perhaps the tariffs apply to some necessary components of the U.S. economy, and slow it down,” he added.
• In the midst of the U.S.-China trade tension, the dollar has weakened in three of the last five sessions against the yen, down more than 5 percent so far this year. Against the Swiss franc, the greenback has fallen 1.4 percent so far in 2018.
• The Japanese and Swiss currencies tend to appreciate in times of geopolitical and economic stress.
• The Chinese news dominated the market, overshadowing a U.S. employment report by payrolls processor ADP which showed a higher-than-expected 241,000 private sector jobs created last month.
• In afternoon trading, after trading lower for most of the session, the dollar rose 0.1 percent against the yen to 106.72 yen, and gained 0.2 percent versus the Swiss franc to 0.9606 franc.
• The dollar, however, dipped 0.1 percent against a basket of six major currencies to 90.14, as the euro edged up slightly versus the dollar to $1.2280.
• In the aftermath of the Chinese tariffs, the yuan on Wednesday suffered its biggest one-day loss versus the dollar since mid-February, down 0.6 percent at 6.3094 yuan per dollar.
• Companies kept up the hiring pace in March, adding 241,000 positions as employment in construction and manufacturing surged, according to a report Wednesday from ADP and Moody's Analytics.
• Growth in non-manufacturing economic activity continued to slow in March, after declining slightly in the prior month.
The Institute of Supply Management's measure of non-manufacturing firms ticked down to 58.8, slightly lower than the 59 expected by a survey of economists polled by Reuters. Non-manufacturing economic activity hit 59.5 in February.
• The United States voiced willingness on Wednesday to negotiate a resolution to an escalating trade fight with China after Beijing retaliated against proposed U.S. tariffs on $50 billion in Chinese goods by targeting key American imports, but the Chinese ambassador to Washington said it "takes two to tango."
• The White House said on Wednesday it hoped China would change its “unfair trade practices” in a way that would avoid the need for the Trump administration to move forward with announced import tariffs.
• China’s ambassador to the United States, Cui Tiankai, arrived at the U.S. State Department on Wednesday for talks with Acting Secretary of State John Sullivan amid a deepening U.S.-China trade dispute.
• Escalating trade tensions between the United States and China may dent production of German luxury SUVs made in the U.S. South and sent to China, with exports from electric vehicle maker Tesla Inc (TSLA.O) and Ford Motor Co (F.N) also vulnerable.
Tesla’s California plant, which ships an estimated 15,000 cars a year to China, as well as BMW’s (BMWG.DE) South Carolina facility and Daimler AG’s (DAIGn.DE) Alabama factory, could lose hundreds of millions of dollars’ worth of production if China goes ahead with its threat to double import tariffs. All three export high-margin luxury models, many of them sport utility vehicles, to China.
• President Donald Trump will sign a proclamation on Wednesday ordering the deployment of the National Guard to help protect the border with Mexico, Homeland Security Secretary Kirstjen Nielsen said.
• The United States plans to sanction Russian oligarchs this week under a law targeting Moscow for meddling in the 2016 U.S. election, sources familiar with the matter said on Wednesday, in what could be the most aggressive move so far against Russia’s business elite.
• Trump has faced fierce criticism for doing too little to punish Russia for the election meddling and other actions, and Special Counsel Robert Mueller is probing whether his campaign colluded with the Russians, an allegation the president denies.
• The sanctions, which two sources said would be announced as early as Thursday, would follow the March 15 U.S. decision to sanction 19 people and five entities, including Russian intelligence services, for cyber attacks stretching back at least two year.
• Russia began testing missiles with live munitions in the Baltic Sea on Wednesday, alarming Latvia, a member of NATO, which says the drills have forced it partly to shut down Baltic commercial airspace.
• Facebook Inc (FB.O) said on Wednesday that the personal information of up to 87 million users, mostly in the United States, may have been improperly shared with political consultancy Cambridge Analytica, up from a previous news media estimate of more than 50 million.
• Oil prices settled slightly lower on Wednesday, as a surprise draw in U.S. crude stockpiles triggered a rebound from session lows hit after China proposed a broad range of tariffs on U.S. exports that fed fears of a trade war.
Brent hit a session low of $66.69 and U.S. crude slumped as low as $62.06.
Reference: Reuters, CNBC
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