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The yen gained 0.3 percent against the dollar to 109.39 in Asian trade. Trading volumes remained light as global markets reopened after the New Year’s Day holiday. Japanese markets remain closed on Wednesday.

The yen has strengthened for three straight weeks on investors’ lower appetite for risk.

“It’s still difficult to be strongly positive given all the uncertainties. Hopefully, there will be progress on trade talks but the market is cautious and that’s benefiting the safe havens such as the yen,” said Sim Moh Siong, currency strategist at Bank of Singapore.

On Wednesday, the dollar index was relatively unchanged from Monday’s close, fetching 96.17.

The U.S. 10-year Treasury yield fell by around 35 basis points over December to 2.69 percent as bond traders bet that the Fed would not be able to raise rates in 2019 due to slowing economic momentum.

The euro slipped 0.16 percent to $1.1446. Traders expect the single currency to remain under pressure as both growth and inflation in the eurozone remain below the European Central Bank’s expectations. The euro lost 4.4 percent of its value versus the dollar in 2018.

 ·         Factory activity weakened across Asia in December as the Sino-U.S. trade war and a slowdown in Chinese demand hit production in most economies, strengthening the case for a pause in interest rate hikes in the region in 2019.

A series of purchasing managers’ indexes for December released on Wednesday mostly showed declines or slowdowns in manufacturing factory activity across the region. In China, the Caixin/Markit PMI slipped into contraction territory for the first time in 19 months, broadly tracking an official survey released on Monday.

In other regions, the euro zone was expected to post steady manufacturing activity growth, while U.S. activity was seen a tad slower, but firmly in expansion territory, in a sign that so far China has suffered more bruises from its trade frictions than the United States.

“We are really seeing a global slowdown into this year, and in Asia, particularly export-oriented countries are hurting,” said Irene Cheung, Asia strategist at ANZ.

“Our expectation for central banks is that most of them won’t change policy in 2019 and these numbers coming out on the weak side won’t change that outlook.”

·         China plans to invest in 6,800 kilometers (4,225 miles) worth of new railway lines in 2019, a 40 percent jump from the length of tracks laid last year, the national railway operator said on Wednesday amid a wider push to boost infrastructure spending.

The country invested 802.9 billion yuan ($117.12 billion) in rail fixed assets in 2018, the company added. It had set an initial budget of 732 billion yuan in January last year.

It did not give an investment target for 2019.

·         If the Organization of the Petroleum Exporting Countries (OPEC) does not follow through with its commitment to reduce oil production throughout this year, Brent crude prices could struggle to rise, according to J.P. Morgan's head of Asia Pacific oil and gas.

In an early December meeting, OPEC and non-OPEC countries agreed to take about 1.2 million barrels a day off the oil market — initially for six months — starting January, amid a persistent imbalance between global oil supply and demand.

 ·         Oil markets dropped by around 1 percent in 2019’s first trading on Wednesday, pulled down by surging U.S. output and concerns about an economic slowdown in 2019 as factory activity in China, the world’s biggest oil importer, contracted.

International Brent crude futures LCOc1 were at $53.19 per barrel at 0544 GMT, down 61 cents, or 1.1 percent, from their final close of 2018.

West Texas Intermediate (WTI) futures CLc1 were at $44.95 per barrel, down 47 cents, or 1 percent.

Reference: Reuters, CNBC