• The dollar traded near a two-week low against a basket of currencies on Wednesday after Chinese President Xi Jinping’s promise to cut import tariffs eased concerns about a U.S.-China trade conflict.
The dollar index versus a basket of six major peers last stood at 89.588, trading within sight of a low of 89.542 set on Tuesday, its lowest level since March 28.
The euro held steady at $1.2360, hovering near Tuesday’s high of $1.2378, its strongest level since March 28.
The yen was little changed at 107.05 yen per the U.S. dollar, giving back some of the 0.4 percent fall on Tuesday when the Japanese currency slipped broadly.
• EUR/USD looks poised to test the March-high (1.2476) as it preserves the series of higher highs & lows from earlier this week, while the Relative Strength Index (RSI) continues to track the bullish formation carried over from late last year.
• Updates to the Consumer Price Index (CPI) may heighten the appeal of the U.S. dollar as both the headline and core rate of inflation are expected to exceed 2% in March.
A material pickup in the CPI may fuel bets for four Fed rate-hikes in 2018 as Chairman Jerome Powell and Co. prepare households and businesses for higher borrowing-costs, and the Federal Open Market Committee (FOMC) may relay a more hawkish tone at the next interest rate decision on May 2 as price growth exceeds the 2% target.
However, a batch of lackluster data prints may produce a bearish reaction in the U.S. dollar as it curbs bets for an extending hiking-cycle, and the central bank may continue to project a neutral Fed Funds rate of 2.75% to 3.00% as the outlook for inflation remains subdued.
• White House lawyers are trying to dissuade U.S. President Donald Trump from seeking to get rid of Special Counsel Robert Mueller, as Trump weighs options after the FBI raided his personal attorney’s office and home, two U.S. officials said on Tuesday.
White House lawyers Ty Cobb and Donald McGahn have been telling Trump that firing Mueller would leave the president vulnerable to charges of obstruction of justice and have said that he must have “good cause” to order Deputy Attorney General Rod Rosenstein to oust Mueller, the officials said.
The lawyers repeated those arguments after Monday’s raids targeting Trump’s personal attorney, Michael Cohen, but have made little or no progress persuading the president, the officials said.
Aides said Trump was fuming on Tuesday over the raids but his future course of action remained unclear.
• The International Monetary Fund (IMF) is optimistic on the outlook for global growth but warned darker clouds are looming due to fading fiscal stimulus and rising interest rates, the fund’s Managing Director Christine Lagarde said on Wednesday.
In a speech in Hong Kong, Lagarde said the top priorities for the global economy are to steer clear of protectionism, guard against financial risk and foster long-term growth.
The IMF chief was speaking as a trade conflict between the United States and China is creating significant uncertainty for businesses and their global supply chains.
• Facebook Inc Chief Executive Mark Zuckerberg on Tuesday navigated through the first of two U.S. congressional hearings without making any further promises to support new legislation or change how the social network does business.
But the 33-year-old internet mogul managed to deflect any specific promises to support any congressional regulation of the world’s largest social media network and other U.S. internet companies.
Investors were impressed with his performance. Shares in Facebook posted their biggest daily gain in nearly two years, closing up 4.5 percent.
• Japan’s core machinery orders rose unexpectedly in February for a second consecutive month thanks to increased orders from manufacturers, a positive sign of corporate investment supporting economic growth.
Separate data out on Wednesday showed wholesale prices rose at a slower pace in February, painting a picture of an economy that is healthy enough to continue growing but not robust enough to generate the inflation the Bank of Japan needs to overcome the country’s deflationary mindset.
The 2.1 percent increase in core orders, a highly volatile data series regarded as a good indicator of capital spending in the next six to nine months, handily beat the gloomy median estimate for a 2.5 percent decline forecast in a Reuters poll of economists.
Wholesale prices in Japan rose 2.1 percent in the year to March, which was more than the median forecast for a 2.0 percent annual increase but still a slowdown from a revised 2.6 percent annual increase in February.
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• China’s factory inflation slowed for a fifth month while the consumer price index retreated from a four-year high.
The producer price index rose 3.1 percent in March from a year earlier, compared with the projected 3.3 percent rise in a Bloomberg survey and 3.7 percent in February. The consumer price index climbed 2.1 percent, the statistics bureau said Wednesday, versus a forecast of 2.6 percent and 2.9 percent in February.
The slowest factory inflation in more than a year may offer limited support to the world reflation cycle, amid rising trade tensions that may weigh on synchronized global growth. Domestic consumer prices are forecast to rise this year, while tariffs added to imports of U.S. products from soybeans to cars may boost inflation if implemented.
• Oil prices on Wednesday eased away from 2014 highs reached the previous session as escalating Middle East tensions were offset by increasing inventories and production in the United States.
Brent crude futures LCOc1 fell to $70.80 per barrel at 0702 GMT, down 23 cents, or 0.3 percent, from their last close. Brent surged more than 3 percent on Tuesday to hit its highest level since late 2014, at $71.34 a barrel.
U.S. WTI crude futures CLc1 were at $65.40 a barrel, down 11 cents, or 0.2 percent from their last settlement.
Reference: Reuters,CNBC
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