• The U.S. dollar fell from 2018 highs set earlier on Wednesday after the Federal Reserve indicated it may allow inflation to run above its 2 percent target, raising concerns that monetary accommodation will stay loose even as they hike rates.
The dollar index .DXY turned negative on the day, falling 0.10 percent to 92.358, after rising before the Fed statement to 92.718, the highest level since Dec. 28.
• Investors had been betting the euro would appreciate against the U.S. currency as the ECB removed stimulus, before a spate of weaker-than-expected data made this less likely in the nearer-term.
• Investors are next focused on Friday’s U.S. employment report for April for further indications of the strength of the economy and inflation pressures.
• U.S. private-sector employers hired 204,000 workers in April, the smallest monthly increase since November, the ADP National Employment Report showed.
• The most likely outcome for tense U.S.-China trade talks launching on Thursday is an agreement to keep talking, with U.S. President Donald Trump maintaining his threat to press ahead with punitive tariffs on Chinese goods, trade experts say
A breakthrough deal to fundamentally change China’s economic policies is viewed as highly unlikely, though a package of short-term Chinese measures could delay a U.S. tariff decision.
The discussions, led by U.S. Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He, are expected to cover a wide range of U.S. complaints about China’s trade practices, from allegations of forced technology transfers to state subsidies for technology development.
• Ahead of a meeting between officials from the world's two largest economies to iron out their trade tensions, state-owned Chinese media has one message for the American delegates: Don't expect China to give into all of your demand.
• The White House said on Wednesday that details about an agreement for Brazil to avoid steel and aluminum tariffs had not been finalized and that President Trump would consider re-imposing the tariffs if they were not settled shortly.
Brazil earlier contradicted a U.S. announcement that the two countries had reached a deal on a permanent exemption from steel and aluminum import tariffs, saying the Trump administration had unilaterally cut off talks.
• U.S. President Donald Trump has all but decided to withdraw from the 2015 Iran nuclear accord by May 12 but exactly how he will do so remains unclear, two White House officials and a source familiar with the administration’s internal debate said on Wednesday.
There is a chance Trump might choose to keep the United States in the international pact under which Iran agreed to curb its nuclear program in return for sanctions relief, in part because of “alliance maintenance” with France and to save face for French President Emmanuel Macron, who met Trump last week and urged him to stay in, the source said.
A decision by Trump to end U.S. sanctions relief would all but sink the agreement and could trigger a backlash by Iran, which could resume its nuclear arms program or “punish” U.S. allies in Syria, Iraq, Yemen and Lebanon, diplomats said.
• China’s state councillor Wang Yi met North Korean Foreign Minister Ri Yong Ho in Pyongyang on Wednesday to discuss bilateral ties and issues regarding the Korean peninsula, North Korean state news agency KCNA and China’s foreign ministry said.
• Oil prices strengthened slightly ahead of the settlement Wednesday as the Federal Reserve held interest rates steady and expressed confidence that a recent rise in inflation would be sustained.
July Brent futures LCOc1 settled up 23 cents at $73.36 a barrel. U.S. West Texas Intermediate crude futures settled up 68 cents at $67.93.
Earlier in the session, the market shrugged off a surprise build in U.S. crude inventories because the move was largely concentrated on the U.S. West Coast.
• Crude stockpiles posted a surprise build of 6.2 million barrels in the week, according to the U.S. Energy Information Administration. [EIA/S]. Nearly 5 million barrels were concentrated on the West Coast.
Reference: Reuters, CNBC
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