· The U.S. dollar rose modestly against a basket of currencies on Wednesday, buttressed by higher U.S. bond yields and the view the Federal Reserve would raise interest rates further on signs of ongoing economic growth.
The dollar also has found support from reduced fears about a U.S. trade war with China and that Western air strikes on Syria would intensify.
- The dollar index, which tracks the greenback against a basket of six currencies, gained 0.12 percent, to 89.626. It has moved between 88.253 and 90.932 sinc
- U.S. two-year Treasury yield hit 2.431 percent on Wednesday, which was its highest since September 2008, Reuters data showed.
- The yield spread on U.S. two-year Treasuries and German two-year Bunds grew to 300 basis points, the widest in nearly three decades, increasing the appeal of holding dollars versus the euro.
- The euro was up 0.03 percent, at $1.2374, while the greenback was 0.27 percent higher at 107.28 yen.
· The Federal Reserve’s latest Beige Book, released on Wednesday, showed the U.S. economy was growing at a modest to moderate pace in March through early April.
“Robust” business borrowing, rising consumer spending, and tight labor markets indicate the U.S. economy remains on track for continued growth, the Federal Reserve reported on Wednesday, with the risks of a global trade war the one big outlier.
· After a decade of ultra loose policy, the Federal Reserve will likely raise interest rates to a “slightly restrictive” setting in the years ahead as unemployment falls and inflation ticks higher, an influential outgoing Fed official said on Wednesday.
New York Fed President William Dudley said he was among the U.S. central bankers last month to mark up forecasts that show the policy rate rising to about 3.4 percent by 2020, a full half a percentage point above the current estimate of “neutral.” Dudley himself said he marked up his estimate of neutral to around 3 percent.
The Federal Reserve is “very much focused” on possible threats to U.S.-China trade that could hurt the U.S. economic outlook, New York Fed President William Dudley said on Wednesday, adding a trade war “is not a winnable proposition.”
· U.S. President Donald Trump and Japanese Prime Minister Shinzo Abe said on Wednesday they had agreed to intensify trade consultations between the two longtime allies, with an aim to expand investment and trade between their countries.
President Donald Trump struck a hopeful note about U.S. trade with Japan on Wednesday at a lunch with the Asian nation’s prime minister, Shinzo Abe, saying he thought the United States would soon be able to trim its trade deficit with the country.
· U.S. President Donald Trump said on Wednesday he hoped an unprecedented summit with North Korean leader Kim Jong Un would be successful after a recent visit to Pyongyang by CIA Director Mike Pompeo, but warned he would call it off if he did not think it would produce results.
· Lockheed Martin's THAAD missile system receives $200 million in Department of Defense funds. Last year, the U.S. deployed two THAAD launchers to South Korea in response to North Korea's increased missile and nuclear tests.
North Korean leader Kim Jong Un has retaliated against the deployment of THAAD on the Korean peninsula.
· U.S. President Donald Trump on Wednesday said he did not fire James Comey “because of the phony Russia investigation,” contradicting his 2017 statement that he ousted the FBI director last year over the probe.
“Both of those things can’t be true,” Comey said in response when asked about the president’s comments on ABC, adding that he still does not know why Trump fired him last May.
“It matters that the president is not committed to the truth as a central American value,” he said on the television network’s “The View” program.
· Oil futures jumped nearly 3 percent on Wednesday on a decline in U.S. crude inventories and after sources signaled top exporter Saudi Arabia wants to see the crude price closer to $100 a barrel.
Brent crude futures LCOc1 settled at $73.48 a barrel, up $1.90, or 2.7 percent. U.S. West Texas Intermediate crude futures CLc1 gained $1.95, or 2.9 percent, to settle at $68.47 a barrel, their highest since late 2014.
· OPEC’s new price hawk Saudi Arabia would be happy for crude to rise to $80 or even $100, three industry sources said, a sign Riyadh will seek no changes to a supply-cutting deal even though the agreement’s original target is within sight.
· Prices were supported as U.S. oil stockpiles fell across the board last week with gasoline and distillates drawing down more than expected on stronger demand, according to data from the U.S. Energy Information Administration.
Crude inventories dropped by 1.1 million barrels as a result of a decline of 1.3 million barrels per day in net crude imports.
Reference: Reuters, CNBC
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