• The U.S. dollar slipped, while the Japanese yen hovered near a two-month low on Wednesday as investors digested the latest trade news.
The US Dollar Index, which tracks the greenback against a basket of other currencies, was down 0.07% at 94.16 by 12:26AM ET (04:26 GMT).
The dollar slipped after Beijing announced on Tuesday retaliatory tariffs that targeted more than 5,000 U.S. products worth $60 billion. The new tariffs would take effect on Sep 24, China’s Ministry of Finance said in a statement. The country’s commerce ministry also filed a complaint to the World Trade Organization (WTO) against the U.S., according to reports.
Meanwhile, the Japanese yen, which is widely considered a safe asset during periods of risk aversion, weakened to near a two-month low of 113.18 earlier in the session as markets took comfort from the fact that the new U.S. tariffs were set at 10% for now rather than the previous expected 25% tariff. The USD/JPY pair last traded at 112.35, down 0.03%.
The Chinese yuan recovered slightly after the news, but still remained near a three-week low. The USD/CNH pair fell 0.12% to 6.8552.
• "The market is beginning to digest that President Trump will go all the way, and I think that China has to be prepared he will go all the way," Victor Chu, the CEO of Hong Kong-based First Eastern Investment Group, told CNBC at the World Economic Forum.
In a statement on the additional tariffs on Chinese goods that were announced Monday, Trump added that if China retaliates, the U.S. will impose tariffs on the remaining $267 billion of Chinese imports.
But some investors may adopt a wait-and-see approach till after the U.S. midterm elections in November, he said.
• "The trade conflict will not force China to succumb to US pressure," the state-owned China Daily newspaper stated in a sharp editorial published Tuesday.
The world's second-largest economy will "outlast" current tensions and "emerge stronger," it continued.
The country announced retaliatory measures against American imports on Tuesday.
• North Korea has agreed to “permanently” abolish its key missile facilities in the presence of foreign experts, and is willing to close its main nuclear complex if the United States takes reciprocal action, South Korea’s President Moon Jae-in said on Wednesday.
Speaking at a joint news conference following their summit talks in Pyongyang, Moon and North Korean leader Kim Jong Un said they agreed to turn the Korean peninsula into a “land of peace without nuclear weapons and nuclear threats.”
Kim said he will visit Seoul in the near future, in what would be the first-ever visit to the South’s capital by a North Korean leader.
• The Bank of Japan kept monetary policy steady on Wednesday and maintained its optimistic view on the economy, even as escalating global trade frictions clouded the outlook.
In a widely expected move, the BOJ maintained its short-term interest rate target at minus 0.1 percent and a pledge to guide 10-year government bond yields around zero percent.
As widely expected, the BOJ maintained its short-term interest rate target at minus 0.1 percent and that for long-term rates around zero percent by a 7-2 vote.
It also stuck to a pledge, put in place in July, to keep rates very low for an extended period as inflation remains far off its 2 percent goal.
“Japan’s economy is expanding moderately,” the BOJ said in a statement announcing the policy decision, adding that solid global demand was underpinning exports.
• The two Koreas have agreed to pursue a bid to co-host the 2032 Olympic Games, they said in a joint statement on Wednesday following a summit between North Korean leader Kim Jong Un and South Korean President Moon Jae-in.
The statement also said they had agreed to “participate jointly” at international competitions including the 2020 Olympic Games in Tokyo.
U.S. President Donald Trump welcomed developments on Wednesday at an inter-Korean summit in the North Korean capital of Pyongyang as “very exciting”.
• Maintaining China’s steady growth is increasingly difficult amid significant changes in the external environment, but China will not resort to massive stimulus, Premier Li Keqiang said on Wednesday.
China will not engage in competitive currency devaluation and will not weaken the yuan to boost exports, Li said.
• The trade war between the United States and China just got a lot bigger after both sides announced their broadest waves of tariffs yet.
The latest exchange of fire means the two economic superpowers will soon have imposed tariffs on more than $360 billion of goods. And analysts say the battle is likely to get worse, even as China starts to run low on ways to retaliate.
The new tariffs announced by Washington and Beijing this week "mark a major escalation of their conflict that will hit global economic growth," Louis Kuijs, head of Asia Economics at research firm Oxford Economics, said in a note.
Analysts have suggested that after Beijing runs out of US goods to target, it could go after major American companies that do business in China, such as Apple and Boeing. China has a track record of such behavior, including making life difficult for South Korean firms because of a political dispute last year with South Korea's government over a US missile defense system.
Some US companies operating in China have already reported increased hurdles, including delays at customs and more inspections by regulators, according to a recent survey by two American chambers of commerce based in the country.
But uncertainty remains over whether Chinese leaders will aggressively pursue that approach on wider scale — by encouraging consumer boycotts of US brands or disrupting supply chains.
• Business and political leaders are increasing the pressure on Canadian Prime Minister Justin Trudeau to agree on a deal to renew NAFTA and drop his insistence that no deal is better than a bad deal.
Foreign Minister Chrystia Freeland will hold fresh talks on the North American Free Trade Agreement with U.S. Trade Representative Robert Lighthizer in Washington on Wednesday as a U.S.-imposed deadline of Oct. 1 looms.
Business and political leaders are increasing the pressure on Canadian Prime Minister Justin Trudeau to agree on a deal to renew NAFTA and drop his insistence that no deal is better than a bad deal.
Foreign Minister Chrystia Freeland will hold fresh talks on the North American Free Trade Agreement with U.S. Trade Representative Robert Lighthizer in Washington on Wednesday as a U.S.-imposed deadline of Oct. 1 looms.
• Oil prices inched up on Wednesday as concerns that producers may not be able to cover a shortfall in supply once U.S. sanctions on Iran kick in outweighed a gain in U.S. stockpiles.
Brent crude futures were up 16 cents at $79.19 per barrel at 0658 GMT, after rising 1.3 percent in the previous session.
U.S. West Texas Intermediate (WTI) crude futures were up 20 cents, or 0.29 percent, at $70.05 a barrel, having climbed 1.4 percent the day before.
Reference: Reuters, CNBC, CNN
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