· Federal Reserve officials would be content to let inflation briefly run above their 2 percent target as the economy continues to recover, according to minutes from the central bank's most recent meeting.
Following the May 1-2 session, the policymaking Federal Open Market Committee said it wasn't raising rates yet but added the word "symmetric" to describe its inflation goal. Market participants since have puzzled over what the change in language might imply.
The central bank also pointed to an interest rate hike at the June meeting.
The Fed's preferred inflation gauge, the core personal consumption expenditures index, currently is at 1.9 percent, while the headline rate including energy and food prices is at 2 percent. Fed officials described wage pressures as "moderate" though it noted there has been more pressure in industries where labor supply is tightening.
Fed officials see 2 percent inflation as a level that sustains economic growth without putting too much upward pressure on prices.
Markets already had been pricing in a 95 percent chance of a quarter-point move at the June FOMC session, followed by another increase in September.
On the economy, committee members said their opinions had changed little as they expect continued progress despite some signs of softening in the first quarter.
There was concern expressed over trade and fiscal issues, with Fed business contacts expressing "concern about the possible adverse effects of tariffs and trade restrictions, including the potential for postponing or pulling back on capital spending."
The outlook otherwise was positive.
· The dollar held near a more than five-month high against a basket of currencies on Wednesday, after minutes of the Federal Reserve’s May policy meeting showed most policymakers thought it likely another interest rate increase would be warranted “soon” if the U.S. economic outlook remains intact.
· “I didn’t really see anything in the minutes that changed anything for the dollar. It still seems like there is a chance of a fourth hike in 2018,” said Sireen Harajli, FX strategist at Mizuho Bank in New York.
· The dollar index .DXY, which measures the greenback against a basket of six other currencies, hit a high of 94.188 before the release of the minutes, but pared some gains to trade up 0.42 percent at 94.006.
· The euro was down 0.69 percent against the greenback at $1.1697, its weakest since mid November.
Worries about an incoming coalition Italian government comprised of the two anti-establishment parties and concerns about Turkey heading for an economic crisis kept the euro on the defensive.
· As the two sides stepped back from a full-blown trade war, Washington neared a deal on Tuesday to lift its ban on U.S. firms supplying Chinese telecoms gear maker ZTE Corp (000063.SZ) (0763.HK), and Beijing announced tariff cuts on car imports.
But U.S. President Donald Trump indicated on Wednesday that negotiations were still short of his objectives when he said any deal would need a “different structure”.
· U.S. President Donald Trump on Wednesday signaled a new direction in U.S. and China’s trade talks, saying the current track appeared “too hard to get done” and that any possible deal needed “a different structure.”
· U.S. President Donald Trump, who has repeatedly pledged to revive American manufacturing, on Wednesday signaled positive changes for U.S. autoworkers but gave no other details.
· Warplanes from the U.S.-led coalition targeted two Syrian army positions in the eastern Syrian desert, a military media unit run by Lebanon’s Hezbollah group said early on Thursday.
The unit, a Damascus ally, said the strikes took place near T2, an energy installation located near the border with Iraq and about 100 km (60 miles) west of the Euphrates river where the coalition is backing ground forces against Islamic State.
· President Donald Trump warned on Wednesday he was working on a plan to reduce U.S. aid to countries he says are doing nothing to stop MS-13 gang members from crossing into the United States illegally.
· China will import record volumes of U.S. oil and is likely to ship more U.S. soy after Beijing signalled to state-run refiners and grains purchasers they should buy more to help ease tensions between the two top economies, trade sources said on Wednesday.
China pledged at the weekend to increase imports from its top trading partner to avert a trade war that could damage the global economy. Energy and commodities were high on Washington’s list of products for sale.
The United States is also seeking better access for imports of genetically modified crops into China under the deal.
· The U.S. Department of Commerce has initiated an investigation into automobile imports to determine whether they "threaten to impair the national security" of the United States, the agency said in a statement on Wednesday night local time.
· The probe will be carried out under Section 232 of the Trade Expansion Act of 1962. That section of the law authorizes the secretary of Commerce to determine "the effects of imports of any article on the national security of the United States."
· The United States carries out a brisk trade in automobile imports and exports, primarily with closely allied countries including Japan, Germany and South Korea.
· North Korea’s vice foreign minister said the future of the summit between Pyongyang and Washington is “entirely” up to the United States and condemned a media interview by U.S. Vice President Mike Pence in which he compared the North to Libya.
· U.S. President Donald Trump said on Wednesday he would know next week whether his summit with North Korean leader Kim Jong Un would take place on June 12 in Singapore as scheduled, casting further doubt on plans for the unprecedented meeting.
· Giuseppe Conte has been given a formal mandate to become Italy’s next prime minister, heading a coalition of two populist parties that is set to take power amid fears that it will challenge Rome’s relationship with Europe.
Policymakers across EU capitals have grown increasingly concerned as Five Star and the League have grown ever closer to power. Investors have abruptly sold Italian assets – a trend that continued on Wednesday, with shares falling and bond yields rising in a reflection of economic uncertainty.
· Iran’s top leader set out a series of conditions on Wednesday for European powers if they want Tehran to stay in a nuclear deal after the U.S. exit, including steps to safeguard trade with Tehran and guarantee Iranian oil sales.
· Oil benchmarks fell on Wednesday after an unexpected build in U.S. crude and gasoline inventories despite strong demand, and as traders weighed a possible increase in OPEC crude output to cover any shortfalls in supply from Iran and Venezuela.
Brent crude LCOc1 futures slipped 23 cents to settle at $79.80 a barrel, while U.S. crude CLc1 lost 36 cents to $71.84 a barrel.
Reference: Reuters, CNBC
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