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·         The dollar rose across the board on Wednesday, climbing to a six-month high against the yen, after Federal Reserve Chairman Jerome Powell gave an upbeat outlook for the U.S. economy and reinforced views that the Fed was on track to steadily hike interest rates.

The dollar index against a basket of six major currencies .DXY edged up 0.1 percent to 95.038 after rising roughly 0.5 percent the previous day.

The dollar was up 0.05 percent at 112.955 yen JPY= after going as high as 113.08, its strongest since January 9.

The euro dipped 0.05 percent to $1.1653 EUR= after losing 0.4 percent overnight.

The 10-year Treasury yield US10YT=RR firmed this week but it has been on a steady decline from a seven-year high above 3 percent set in May.

The two-year Treasury yield US2YT=RR, most sensitive to the market’s views on changes in Fed policy, has risen to a decade-high.

As a result the U.S. yield curve was the flattest in 11 years and close to inverting, a phenomenon in which the two-year yield becomes higher than the longer-dated Treasury yield.

·         U.S. President Donald Trump's trade offensive against Beijing coincided with a drop in his disapproval ratings, Nomura Chief Economist Rob Subbaraman and analyst Michael Loo wrote in a recent note.

"Perhaps President Trump's efforts to deliver on some of his harsher campaign rhetoric on trade are starting to shore up his core support base. Moreover, the data are in his favor: The U.S. trade deficit with China has increased over most of his presidency," the Nomura analysts wrote.

·         China’s fiscal policy should help steer structural changes rather than stimulating growth in a forceful way, a senior finance ministry researcher said in remarks published on Wednesday, amid a heated debate on how to steer policy as the economy slows.

The remarks by Liu Shangxi, head of Chinese Academy of Fiscal Sciences under the finance ministry, come amid a debate among government researchers on whether fiscal policy should help to soften the impact of a trade war with the United States.

·         The European Central Bank’s 2.6 trillion euro bond purchase scheme may have reduced income inequality, fresh research by ECB economists showed, disputing critics who argue that lavish stimulus mainly benefited the wealthiest of households.

Pushing up economic growth, the stimulus fueled job creation, benefiting households among the poorest 20 percent of people by compressing income distribution and temporarily halting a widening of the gap between rich and poor, the paper, which is not necessarily the ECB’s opinion, argued.

Still, the bond purchases have done little to reduce wealth inequality and the researchers argue that even in the case of incomes, the impact is small compared with the historical trend for rising inequality.

·         South Korea’s central bank needs to more closely monitor financial stability and capital outflows as the spread between the nation’s benchmark interest rate and its U.S. counterpart widens, a bank board member said on Wednesday.

With the U.S. federal funds rate at 1.75 percent to 2 percent range, above South Korea’s 1.5 percent benchmark policy rate, economists have been warning of capital outflow risks in Asia’s fourth largest economy as investors seek higher yields in the U.S.

·         South Korea on Wednesday cut its economic growth forecast for this year, citing a feeble labor market recovery and global trade tensions.

In its bi-annual economic policy report, the nation’s finance ministry projected growth of 2.9 percent for this year, in line with the Bank of Korea’s projections and down from a 3 percent estimate in December.

·         “The outlook is consistent with two further quarter point rate increases this year, likely in September and December,” said Barclays economist Michael Gaspen. 

“The main risk is that individuals, business, and financial markets have underestimated the desire of Trump to re-orient trade flows and that further steps to implement tariffs will lead to a reduction in confidence, a slowdown in hiring, and a correction in equity markets,” he added.

·         China’s foreign ministry said on Wednesday that a U.S. trade war has become the biggest “confidence killer” for the global economy, and that the whole world would fight back if the United States continued to impose tariffs.

·         BofA Merrill Lynch’s latest fund manager survey showed a trade war remained the biggest threat cited by no less than 60 percent of respondents.

·         Bank of England Governor Mark Carney warned a no-deal Brexit would have “big” economic consequences and force a review of plans to raise interest rates.

Sterling was last huddled at $1.3090 GBP=D3, after sliding 0.9 percent on Tuesday.

·         Iran has built a factory that can produce rotors for up to 60 centrifuges a day, the head of its atomic agency said on Wednesday, upping the stakes in a confrontation with Washington over the Islamic Republic’s nuclear work.

·         Oil prices fell on Wednesday on news of a rise in U.S. crude inventories last week, defying analyst expectations for a big fall, while concerns about weak demand growth also resurfaced.

Brent futures were down 43 cents, or 0.6 percent, at $71.73 a barrel by 0335 GMT, wiping out a 32 cent gain on Tuesday when the benchmark hit a three-month low.

U.S. West Texas Intermediate crude was down 50 cents, or 0.7 percent, at $67.58, not far off Tuesday’s one-month low at $67.03 a barrel.

·         Oil prices are back on the defensive with WTI crude barrels back beneath 68.00 as US inventory supplies bumped higher than expected.

With WTI crude prices sliding back into the 67.90 area, oil bulls will be looking for a bounce from a rising trendline in the 66.00 region, while June's lows near 63.50 is putting a floor underneath any potential moves lower; with the severity of the recent drop on the technical charts, resistance is firming up at the last swing low of 69.25, with the year's highs nearby at 75.35 per barrel.