· The yen slipped and the Australian dollar rose on Wednesday as concerns over the U.S.-China tariff war receded further following a Financial Times report that the two sides have resolved most of the issues standing in the way of a trade deal.
The yen was a touch lower at 111.455 per dollar after brushing 111.53, its weakest since March 20.
The Japanese currency, a perceived safe-haven, is often sold when risk aversion abates in the broader markets.
The dollar index against a basket of six major currencies was down 0.1 percent at 97.236, having lost some traction after climbing a 3-1/2-week peak of 97.517 the previous day.
· The pound was effectively flat at $1.3136.
Sterling had gained 0.25 percent the previous day after Prime Minister Theresa May said she would seek another Brexit delay to work with the opposition Labour leader on an alternative EU divorce deal, a last-ditch gambit to break an impasse over Britain's departure.
· The euro nudged up 0.15 percent to $1.1224 after slipping overnight to $1.1183, its lowest since March 8, weighed by a decline in German bund yields.
German yields have been anchored below zero as the deadlock over Brexit has fueled investor demand for the safe havens.
· Top US and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute but are still haggling over how to implement and enforce the agreement, people briefed on the talks have said.
Liu He, China’s vice-premier, was preparing to meet Robert Lighthizer, the US trade representative, and Steven Mnuchin, the US Treasury secretary, for a potentially climactic negotiation session starting Wednesday in Washington. The talks are the latest in a series of meetings over the past four months.
Although an agreement was within reach, the two sides remain apart on two key issues — the fate of existing US levies on Chinese goods, which Beijing wants to see removed, and the terms of an enforcement mechanism demanded by Washington to ensure that China abides by the deal.
· The Financial Times reported that top U.S. and Chinese officials have resolved most of the issues standing in the way of a deal to end their long-running trade dispute but are still haggling over how to implement and enforce the agreement, citing people briefed on the talks.
· Brexit may look like a confused mess for many, but the big banks are still making calls.
CNBC takes a look at what Wall Street thinks will happen next.
· Goldman Sachs
Goldman Sachs said Brexit has cost the U.K. £600 million ($783 million) a week since the 2016 referendum, with economic growth declining by around 2.5 percent.
The bank also sees a 15 percent chance of a no-deal Brexit which would cause a 17 percent decline in the pound.
The bank has assigned a 35 percent probability of Brexit not happening at all.
· J.P. Morgan
The inability of lawmakers, so far, to forge a clear path forward has given May a tiny bit of wiggle room to potentially return to the Houses of Parliament with a fourth shot at getting her provisional agreement over the line.
Of the alternatives that lawmakers have been looking into, J.P. Morgan predicts Parliament will coalesce around a single “softer Brexit” option this week.
The bank’s greatest probability is a general election at 30 percent, with May’s agreement or a long extension to the U.K. exit placed at 20 percent. A second referendum or a no deal are both the least likely options at 15percent each.
· Growth in developing Asia could slow for a second straight year in 2019 and lose further momentum in 2020, the Asian Development Bank (ADB) said on Wednesday, warning of rising economic risks from a bitter Sino-U.S.trade war and a potentially disorderly Brexit.
Developing Asia, which groups 45 countries in the Asia-Pacific region, is expected to grow 5.7 this year, the ADB said in its Asian Development Outlook report, slowing from a projected 5.9 percent expansion in 2018 and6.2 percent growth in 2017.
The 2019 forecast represents a slight downgrade from its December forecast of 5.8 percent. For 2020, the region is forecast to grow 5.6 percent, which would be the slowest since 2001.
China’s economy will probably grow 6.3 percent this year, the ADB said, unchanged from its December projection, but slower than the country’s 6.6 percent expansion in 2018. Growth in the Chinese mainland is projected to cool further to 6.1 percent in 2020.
· Japan’s economic output exceeded its full capacity in October-December by the most in more than 26 years, offering the central bank some hope a sustained recovery will help inflation accelerate toward its elusive 2percent target.
But the Bank of Japan will likely maintain a dovish tone as heightening overseas risks threaten to derail the country’s export-reliant recovery, say sources familiar with its thinking.
· Canadian Prime Minister Justin Trudeau on Tuesday sought to quell a crisis that threatens his chances of re-election, expelling from party ranks two former Cabinet members he said had undermined the ruling Liberals.
Trudeau said former Justice Minister Jody Wilson-Raybould and former Treasury Board chief Jane Philpott would no longer be allowed to sit as Liberal legislators. They were also barred from running for the party in the federal election this October.
The Liberals have been in turmoil since Wilson-Raybould said in February that officials had inappropriately pressured her last year while she was justice minister to ensure that construction company SNC-Lavalin Group Inc escape a corruption trial.
Opinion polls show the crisis has cut public support for the Liberals to such an extent that they could lose in October to the official opposition Conservatives.
Trudeau, who came to power promising “sunny ways” and a greater role for women in politics, admitted it “has been a difficult few weeks.”
The scandal also cost him the services of his closest aide, Gerald Butts, and Michael Wernick, the head of the federal bureaucracy.
· Oil prices rose for a fourth day on Wednesday, pushing Brent towards $70 a barrel as support from OPEC-led supply cuts and U.S. sanctions overshadowed a report showing an unexpected rise in U.S. inventories.
Brent futures rose 36 cents, or 0.5 percent, to $69.73 a barrel by 0554 GMT, after earlier reaching $69.87, the highest since Nov. 12, the last time they traded above $70.
U.S. West Texas Intermediate crude rose 26 cents, or 0.4 percent, to $62.84 cents a barrel, earlier rising to $62.90, the highest since Nov. 7.
Reference: Reuters, CNBC, Financial times
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