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• The dollar retreated modestly against a basket of major currencies on Wednesday as sterling and the euro rose following a Bloomberg report that the German and British governments had abandoned key Brexit demands, potentially easing the path for a divorce deal.

The dollar index, which measures the greenback against a basket of six currencies, was down 0.3 percent at 95.154.

The British pound gave up some of the gains after Germany appeared to shoot down the report and said it is preparing for all Brexit scenarios, including a no-deal.

Sterling was up 0.4 percent at $1.2905 against the dollar, while the euro was 0.39 percent higher against the greenback at $1.1626.

• The U.S. trade deficit rose to a five-month high in July, with the politically sensitive gap with China hitting a record high, which economists said could embolden the Trump administration to aggressively pursue its “America First” agenda.

“America still isn’t getting a fair deal on trade and that can only mean one thing,” said Chris Rupkey, chief economist at MUFG in New York. “President Trump is going unleash another $200 billion in tariffs on China imports.”

The Commerce Department said the trade deficit increased 9.5 percent to $50.1 billion as exports of soybeans and civilian aircraft dropped and imports hit a record high. The trade gap has now widened for two straight months.

• U.S. President Donald Trump said on Wednesday that the United States was not yet ready to come to an agreement over trade disputes with China but he said talks would continue.

• The United States and Canada have made progress in talks to revise the North American Free Trade Agreement, and officials from the two sides will work together into the night to flesh out areas for further discussion, Canadian Foreign Minister Chrystia Freeland said on Wednesday.

• Canada’s retaliatory tariffs sent imports of some U.S. goods sharply lower in July after a June surge, Statistics Canada data showed on Wednesday, offering a first look at the impact of the Canadian duties.

On July 1, Canada imposed tariffs on a wide variety of U.S. steel, aluminum and other goods, from soy sauce to sleeping bags, in retaliation against U.S. President Donald Trump’s steel and aluminum tariffs.

• President Donald Trump said on Wednesday he would be willing to shut down the U.S. government if Congress does not provide enough funding for border security, reversing a stance he took a day earlier.

Trump made his comments at a meeting with congressional Republican leaders at the White House about the legislative agenda for the next few months, including extending government funding past a Sept. 30 deadline.

He said Congress was making “tremendous progress” on funding, but that he wanted to make good on a promise to fund border security. Trump has repeatedly threatened not to sign funding legislation if Congress fails to include enough money for a wall on the border with Mexico.

• U.S. President Donald Trump on Wednesday said he did not discuss assassinating Syrian leader Bashar al-Assad, disputing an account in a forthcoming book by journalist Bob Woodward.

• Euro zone business activity picked up a bit last month, extending a period of solid growth, but a growing global trade war kept optimism in check and suggests the pace may not be maintained, a survey showed.

Signs of robust growth and inflationary pressures means the European Central Bank is unlikely to be swayed from closing its 2.6 trillion euro asset purchase program by year-end.

IHS Markit’s Euro Zone Composite Final Purchasing Managers’ Index (PMI), seen as a good guide to economic health, nudged up in August to 54.5 from July’s 54.3, just above an earlier flash estimate of 54.4. Anything above 50 indicates growth.

• Argentina’s economy minister sounded upbeat on Wednesday about clinching a new deal with the International Monetary Fund after two days of talks in Washington, and said had sought U.S. support for securing approval from the IMF’s board.

The peso ARS=RASL closed 1.38 percent stronger at 38.52 per dollar on Wednesday, marking a rare pause in losses that have shaved more than 50 percent off its value this year, making it one of the worst performing emerging market currencies.

Economy Minister Nicolas Dujovne said he believed a deal to release early disbursements from a $50 billion standby loan agreement with the IMF could be put to its board by the end of the month, helping to shore up investor confidence in Latin America’s third-largest economy.

• Some of the largest U.S. cities spent more on pension payments and other fixed costs in fiscal 2017 than the year before, and those expenses are likely to continue to weigh on budgets, according to an annual report released by S&P Global Ratings on Wednesday.

• S&P Global Ratings cut its credit ratings for two Dubai state-owned companies, saying a weakening economy in the emirate was hurting the government’s ability to extend emergency support to the firms if needed.

• South Korea said its envoys met with North Korean leader Kim Jong Un in Pyongyang on Wednesday to prepare for a third inter-Korean summit later this month, with hopes of putting momentum back into stalled talks between the North and the United States on denuclearization.

• Oil prices fell more than one percent on Wednesday after a U.S. Gulf storm weakened and moved away from oil-producing areas and as concerns mounted about global trade disputes and Turkey’s currency crisis hurting demand.

U.S. West Texas Intermediate (WTI) crude CLc1 futures fell $1.15 to settle at $68.72 a barrel, a 1.65 percent loss.

Brent crude LCOc1 futures fell 90 cents to settle at $77.27 a barrel, a 1.15 percent loss. The global benchmark had climbed in the previous session to $79.72 a barrel, its highest since May.

Reference: Reuters