The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was up 0.13% to 94.75 by 03:10 AM ET (07:10 GMT), pulling away from an overnight low of 94.34, which was the weakest level since August 1.
Market sentiment has been boosted by the more positive outlook on trade after the U.S. reached an agreement with Mexico on a trade deal aimed at overhauling the North American Free Trade Agreement.
There are hopes that Canada, the other NAFTA trade partner, will join the new deal in the coming days.
• The dollar was little changed against the yen, with USD/JPY trading at 111.25.
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· The US will release the second version of Q2 GDP on Wednesday, August 29th, at 12:30 GMT. The first read came out at a growth rate of 4.1 percent annualized, the fastest clip in four years. US President Donald Trump took a victory lap on the robust rate of growth.
Part of the elevated growth rate is due to Chinese importers rushing to purchase US goods before China's counter-tariffs kicked in. Another part of the acceleration is due to other reasons. The second release is expected to show a modest downgrade to 4.0 percent. A minor change will keep the focus on the components of growth.
The second publication of GDP growth may not be as critical as the first release, but any change could change the trajectory of the Fed beyond September. Moreover, the components of growth make a difference. A higher share for exports would cause doubts while elevated consumption would be welcome.
· Treasury Secretary Steven Mnuchin on Tuesday praised China for supporting its currency at a time when Washington and Beijing are locked in a trade war.
"Their currency is more of a controlled currency than other markets that are free access," Mnuchin told CNBC. "But if they go in and support their currency, that is not currency manipulation."
"If they [China] let their currency weaken, either for structural reasons or for actual manipulation, that is something that is manipulation," he added in the interview on "Squawk Box."
· U.S. President Donald Trump said on Twitter early on Wednesday China hacked the emails of 2016 Democratic presidential candidate Hillary Clinton but did not offer any evidence or further information.
· Citigroup Inc (NYSE:C). is bullish on the dollar. U.S. President Donald Trump could change that.
The administration’s preference for a weaker greenback, combined with its unpredictable policy moves, pose a key risk for foreign exchange markets, according to Calvin Tse, North American head of G-10 FX strategy at Citigroup in New York. Even though the chances are slim, investors can’t ignore the possibility that the Treasury may intervene by selling dollars, Tse said.
“We remain structurally bullish,” as strong growth and relative yields attract capital to the U.S., Tse said in an email. “The biggest risk to our view, however, is that the Treasury decides to intervene to weaken the USD. Though still a tail risk, if they were able to corral the Fed to participate, this would be a game changer for the USD outlook.”
· China’s economy is facing increasing risks in the second half of the year and policymakers need to step up efforts to hit key development goals, the head of the state planning agency warned, as U.S. trade tensions intensify.
Weighed down by rising financing costs, China’s economy was already starting to cool even before the trade dispute with Washington escalated, with investment growth at a record low and consumers turning more cautious about spending.
Beijing is speeding up infrastructure spending and offering help to smaller companies to prevent a sharper slowdown, though policymakers are wary of adding to a mountain of debt that was fueled by past stimulus binges.
· Oil prices dipped on Wednesday, pulled down by a reported rise in U.S. crude inventories, although falling exports from Iran ahead of U.S. sanctions prevented the market from sinking further.
International Brent crude oil futures LCOc1 were at $75.90 per barrel at 0611 GMT, down 5 cents from their last close.
U.S. West Texas Intermediate (WTI) crude futures CLc1 were down 4 cents at $68.49 a barrel.
In the United States, crude inventories rose slightly, by 38,000 barrels, to 405.7 million barrels in the week to Aug. 24, industry group the American Petroleum Institute said on Tuesday.
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