• The U.S. dollar crept nearer to 14-year peaks on Wednesday as an abundance of upbeat global economic data boosted Wall Street and signs of quickening inflation dented fixed-income debt.
• The dollar index .DXY , which measures the greenback against a basket of currencies, was at 103.25after climbing to 103.82 the previous day, its strongest since December 2002. USD/
• China has studied possible scenarios for the yuan and capital outflows this year and is preparing contingency plans, according to people familiar with the matter.
The reported plans come amid increasing pressure on the yuan from a resurgent dollar, rising capital outflows and concern that U.S. President-elect Donald Trump may make good on his threats to take punitive measures on China’s exports. Policy makers in Beijing have recently taken a slew of measures to tighten control of the currency market, including placing higher scrutiny on citizens’ conversion quotas and stricter requirements for banks reporting cross-border transactions.
• Big Oil could be in a unique position to protect its interests against a Republican proposal to tax imports, given that President-elect Donald Trump's cabinet is studded with oil champions sensitive to the risk of higher gasoline prices.
Because U.S. oil refiners import about half the crude oil they use to make gasoline, diesel and other products, analysts say the change could lead to higher gasoline prices and potentially undermine economic growth.
The danger is that a move to protect the oil refiners could open the door to assistance for other industries, including retailers and automakers, which would also face higher costs if no longer able to deduct the cost of imports from their taxable income.
Moreover, some economists dismiss industry worries about higher import costs, saying the dollar's value would rise in response to such sweeping tax changes and ultimately reduce the cost of imports. Currency markets would adjust to higher oil prices by lowering the dollar value of crude, they predict.
• Oil prices edged higher this morning, with top exporter Saudi Arabia expected to raise prices for its crude as part of planned supply cuts.
But a strong dollar and moderate economic growth prospects restricted gains.
US West Texas Intermediate (WTI) crude futures were trading at $52.66 per barrel, up 33 cents, or 0.6%, from the last settlement.
Brent crude futures were up 34 cents, or 0.6%, at $55.81 a barrel.
Reference: Reuters
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