• The U.S. dollar index rose to its highest levels in a week on Wednesday after minutes from the Federal Reserve’s September meeting affirmed expectations that the U.S. central bank is likely to continue raising interest rates.
Every Fed policymaker backed raising interest rates last month and also generally agreed borrowing costs were set to rise further.
The dollar index gained 0.49 percent to 95.510 after earlier reaching 95.562, the highest since Oct. 10.
• Interest rate futures are now pricing in a 78 percent likelihood that the U.S. central bank raises rates in December for the fourth time this year, up from77 percent before the minutes, according to the CME Group’s FedWatch Tool. Two more increases are further likely next year.
• Sterling weakened after the European Union’s chief Brexit negotiator, Michel Barnier, said on Wednesday much more time was needed to secure an exit deal for Britain.
The British pound had weakened earlier on Wednesday after consumer price data for September came in at an annual rate of 2.4 percent versus forecasts of 2.6 percent.
The euro fell 0.64 percent to $1.1499 and Sterling was last trading at $1.3115, down 0.52 percent on the day.
• Some market analysts warned against buying into the dollar’s strength, however, saying financial conditions appeared to be tightening globally.
• Federal Reserve policymakers are largely united on the need to raise borrowing costs further, minutes from their most recent policy meeting show, despite U.S. President Donald Trump’s view that interest rate hikes have already gone too far.
Participants in the Fed’s rate-setting committee also “generally anticipated that further gradual increases” in short-term borrowing costs “would most likely be consistent” with the kind of continued economic expansion, labor market strength, and firm inflation that most of them are anticipating, the minutes showed.
“This gradual approach would balance the risk of tightening monetary policy too quickly, which could lead to an abrupt slowing in the economy and inflation moving below the Committee’s objective, against the risk of moving too slowly, which could engender inflation persistently above the objective and possibly contribute to a buildup of financial imbalances,” the minutes said.
Though the minutes did not refer to any of Trump’s criticism, its message of further rate increases suggests that policymakers are not fazed by it.
• U.S. President Donald Trump, faced with a budget deficit at a six-year high, on Wednesday told his Cabinet to come up with proposals to cut spending by their agencies by 5 percent, but he suggested the military would be largely spared.
• U.S. President Donald Trump said on Wednesday he did not want to abandon close ally Saudi Arabia over the disappearance of a Saudi journalist and government critic, and he needed to see evidence to prove Turkish claims he was killed by Saudi agents.
Trump said he was waiting for a full report on what had happened to Jamal Khashoggi from Secretary of State Mike Pompeo, whom he sent to Saudi Arabia and Turkey to meet with officials over the disappearance.
Pompeo meanwhile said Riyadh should be given a few more days to complete its own probe into Khashoggi’s disappearance. He met Turkey’s president and foreign minister, a day after Trump gave Saudi Arabia the benefit of the doubt.
• Severe damage could be done to the multilateral trading system unless political steps are taken to solve a “serious” crisis in global trade, Roberto Azevedo, director-general of the World Trade Organisation, said on Wednesday.
“Without action to ease tensions and recommit to cooperation in trade, we could see serious harm done to the multilateral trading system. And ... the long term economic consequences of this could be severe,” Azevedo said in remarks to a dinner in London, without referring directly to the United States and China which have been involved in an escalating trade dispute.
• Mexico’s government on Wednesday said it hoped to end disputes with the United States and Canada over steel tariffs before the next Mexican administration takes office at the start of December.
The steel dispute has hung over the renegotiation of the North American Free Trade Agreement, with the three countries finally reaching a deal late last month. The three countries aim to sign the new agreement by Nov. 30.
• British Prime Minister Theresa May assured EU leaders in Brussels on Wednesday that she can still reach a Brexit deal, avoiding a showdown over stalled talks as Brussels stepped up planning for a failure of negotiations.
• British Prime Minister Theresa May urged the other leaders of the European Union on Wednesday to help secure a Brexit agreement, saying they had done “difficult deals” before and could again.
• The United States plans to turn up sanctions pressure on Venezuela but sees less need to immediately target its energy sector, given sagging production from the OPEC member’s state-run oil company, a senior U.S. administration official said on Wednesday.
Venezuela’s crude oil production hit a 28-year low in 2017, a slump blamed on poor management and corruption.
• Oil prices fell on Wednesday, with U.S. futures settling below $70 a barrel for the first time in a month, after U.S. crude stockpiles rose 6.5 million barrels, almost triple what analysts had forecast, while exports dropped.
U.S. crude oil CLc1 slumped $2.17, or 3 percent, to settle at $69.75 a barrel.
Brent crude LCOc1 also dipped below $80 a barrel but ended at $80.05, $1.36 or 1.7 percent lower. The global benchmark is trading nearly $7 below a four-year high of $86.74 reached on Oct. 3.
Reference: Reuters
Thai
Eng