The U.S. currency has also been weighed down as safe-haven demand for the liquid dollar has ebbed on optimism that a fresh round of talks between China and the United States would help resolve their trade conflict.
The dollar index versus a basket of six major currencies was a touch lower at 96.495 after shedding about 0.4 percent overnight.
· "The dollar is weighed with Treasury yields on a downturn. Attempts by participants to price in potentially dovish FOMC (Federal Open Market Committee) meeting minutes are also keeping the dollar on the defensive," said Yukio Ishizuki, senior currency strategist at Daiwa Securities.
The benchmark 10-year U.S. Treasury yield fell sharply to an 11-day low on Tuesday ahead of the Fed meeting minutes, which are due later on Wednesday.
The minutes from the January Fed meeting will be closely watched following a dovish statement from the central bank at their January policy-setting meeting.
· The dollar was steady at 110.61 yen, unable to remain near a high of 110.825 touched the previous day after Bank of Japan Governor Haruhiko Kuroda said the central bank was ready to ramp up stimulus if sharp yen rises hurt the economy.
· The euro was unchanged at $1.1341 after advancing 0.25 percent on Tuesday, when it brushed a near two-week peak of $1.1358.
· Offshore Chinese yuan extended the previous day's gains to touch 6.74 per dollar, its strongest since Feb. 1.
The yuan had been lifted on Tuesday after Bloomberg reported that said the United States is pressing to secure a pledge from China that it will not devalue its yuan as a part of a trade deal.
The pair is now above the 61.8% retracement of the 1.3217/1.2772 slide at around 1.3050, up over 100 pips in the American session, resulting in technical indicators reaching extreme overbought readings in the 4 hours chart. Nevertheless, both the Momentum and the RSI maintain their strong bullish slopes, while the price is far above a now bullish 20 SMA and a directionless 200 EMA, all of which favors an upward extension ahead. The risk, however, is as always uncertainty surrounding Brexit as failed talks between May and Juncker could result in the pair giving back all of its recent gains.
Support levels: 1.3050 1.3010 1.2970
Resistance levels: 1.3090 1.3140 1.3185
· The Russian ruble eased slightly in early trade on Wednesday but hovered close to a one-week peak ahead of an annual address to parliament by President Vladimir Putin.
At 1037 GMT the ruble was 0.1 percent down against the dollar at 65.83 after firming to 65.74 the day before, its strongest level since Feb. 13.
Putin’s televised address to parliament and other members of the Russian political elite is due to start at 0900 GMT. He is expected to touch upon a wide range on topics, both domestic and international, a day after data showed yet another drop in real disposable incomes among Russians.
· China’s central bank said that it would implement 1-year central bank bill swaps worth 1.5 billion yuan ($222.02 million) on Wednesday to improve the liquidity of banks’ perpetual bonds, and support issuance of the bonds to replenish capital.
The People’s Bank of China (PBOC) made the announcement in a statement on its website on Wednesday.
PBOC Vice Governor Pan Gongsheng said on Tuesday that China would provide further support for banks’ perpetual bond issuance, including examining ways to broaden the investor base for such bonds, to help boost lending in the economy.
· Tokyo Commodity Exchange (TOCOM) futures, which set the tone for rubber prices in Southeast Asia, hit a four-week high on optimism over a potential US-Sino trade deal, while a rally in Tokyo stock market and stronger oil prices boosted risk appetite.
The benchmark TOCOM rubber contract for July delivery ended up 4.5 yen, or 2.5 percent, at 187.0 yen ($1.69) per kg, marking the highest since Jan. 22. The most-active rubber contract on the Shanghai futures exchange for May delivery rose 175 yuan to finish at 11,815 yuan ($1,746) per tonne. TOCOM's technically specified rubber (TSR) 20 futures contract for August delivery closed 2.8 percent higher at 159.4 yen per kg
The front-month rubber contract on Singapore's SICOM exchange for March delivery last traded at 135.7 US cents per kg, up 0.7 percent. "On top of hopes for the trade pact and higher Nikkei, rising physical prices at Thailand also prompted buying in the TOCOM," said Toshitaka Tazawa, an analyst at commodities broker Fujitomi Co.
· The European Central Bank will discuss “very soon” whether to provide a new round of multi-year loans to banks but may not immediately decide on their terms, its chief economist Peter Praet said on Wednesday.
“The discussion will come very soon in the Governing Council. It doesn’t mean we’ll take decisions... at that time,” Praet said about a new Targeted Long-Term Refinancing Operation (TLTRO).
· President Donald Trump expressed confidence on Tuesday that he would prevail against a lawsuit filed by 16 U.S. states seeking to block his declaration of a national emergency to fund a wall along the U.S. border with Mexico.
Trump’s remarks to reporters in the Oval Office suggested he was not concerned or surprised by the states’ legal challenge.
“I think, in the end, we’re going to be very successful with the lawsuit,” Trump said. “It’s an open-and-closed case.”
· The United States should respect China’s right to develop and become prosperous, the Chinese government’s top diplomat told a visiting U.S. delegation, reiterating that the country’s doors to the outside world would open wider.
The world’s two largest economies began their latest round of trade talks this week to resolve a bitter dispute in which each has levied tariffs on imports from the other.
· British Prime Minister Theresa May makes another trip to Brussels on Wednesday, hoping European Commission chief Jean-Claude Juncker may prove more yielding than of late to salvage her Brexit deal.
· Oil prices were around 2019 highs on Wednesday, propped up by supply cuts led by producer club OPEC and by U.S. sanctions on Iran and Venezuela.
But soaring U.S. production and expectations of an economic slowdown look set to cap prices, analysts said.
U.S. West Texas Intermediate (WTI) crude oil futures hit 2019 highs of $56.39 per barrel shortly after 0300 GMT on Wednesday, up 30 cents, or 0.5 percent, from their last settlement.
International Brent crude futures were at $66.58 per barrel, up 13 cents, or 0.2 percent, from their last close and not far off their 2019 high of $66.83 per barrel from Monday.
· OPEC-member and top crude exporter Saudi Arabia is expected to reduce shipments of light crude oil to Asia in March as part of the effort to tighten markets.
OPEC as well as some non-affiliated producers such as Russia agreed late last year to cut output by 1.2 million barrels per day (bpd) to prevent a large supply overhang from swelling
· "We have lowered Saudi crude oil output in line with announcements ... (and) are now assuming that Saudi Arabia will produce in the first three quarters of 2019 less than the 10.31 million bpd target it agreed to at the Dec. 7 OPEC, non-OPEC meeting," French bank BNP Paribas said in a note.
Because of the cuts, BNP said it expected oil prices "to rally through Q3 2019", with Brent to average $73 per barrel by then and WTI to average $66.
Reference: Reuters,CNBC,Trading View
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