· The dollar reached a three-week high against the yen and stood tall against the euro on Wednesday ahead of a Federal Reserve policy meeting that could give clues on how many more U.S. rate hikes there will be this year.
The Fed concludes its two-day policy meeting later on Wednesday, at which it is widely expected to hike rates for the second time this year.
The dollar index against a basket of six major currencies inched up 0.09 percent to 93.888, after rising 0.25 percent the previous day.
The dollar was 0.25 percent higher at 110.660 yen after brushing 110.68, its highest since May 23.
The euro was flat at $1.1745 after slipping 0.35 percent overnight.
The near-term direction of the euro is likely to be dictated by the Fed session and Thursday’s European Central Bank policy meeting.
· The spotlight then turns to the FOMC policy announcement. A rate hike is widely expected, making the accompanying forward guidance the primary market mover. Activity surveys point to brisk pickup in growth and swelling inflationary pressure in the first two months of the second quarter, suggesting baseline forecasts as well as the tone of official comments might lean hawkish. That bodes well for the US Dollar.
· Italy’s borrowing costs dropped sharply on Wednesday ahead of a key bond auction after the country’s new EU Affairs Minister Paolo Savona said the euro was “indispensable” and denied he had ever suggested leaving the single currency.
Italy’s two-year government bond IT2YT=RR, the asset through which market fears about Italian redenomination and default have largely played out, saw its yield drop well below 1 percent and was last down 14 basis points at 0.90 percent.
· North Korean leader Kim Jong Un said Donald Trump offered to lift sanctions against his regime when they met Tuesday in Singapore, state media reported, a claim that contrasts with the U.S. president’s rhetoric that the economic strictures would remain.
The report from the Korean Central News Agency, which was published after Kim returned home from his meeting, noted Trump’s vow to suspend U.S. military drills in South Korea. It also said Trump committed to unspecified “security guarantees” for Pyongyang, and to “lift sanctions against it.”
· A halt in joint military drills with the United States may be necessary to expedite talks on North Korea’s denuclearization, South Korea’s presidential office said on Wednesday, according to the country’s Yonhap news agency.
· Oil prices fell on Wednesday, hit by rising supplies in the United States and expectations that producer group OPEC could relax voluntary output cuts.
Benchmark Brent crude oil LCOc1 was down 35 cents at $75.53 a barrel by 0730 GMT. U.S. light crude CLc1 was 40 cents lower at $65.96.
Reference: Reuters, DailyFX, Bloomberg
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