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· The dollar and the safe-haven yen edged higher on Wednesday, but not much, as a lack of clarity on U.S.-China trade talks kept investors cautious.

Ahead of the release of minutes from the U.S. Federal Reserve’s last policy meeting at 1900 GMT, traders were again reading tea leaves on the trade negotiations’ progress.

More upbeat reports hinting that talks were getting down to nuts and bolts were offset by rising tension between the parties over Hong Kong. The U.S. Senate’s approval of bills aimed at protecting human rights there drew a sharp rebuke from China.

After falling overnight, the greenback rose 0.2% on the Australian dollar to $0.6818. It added 0.1% on the New Zealand dollar to $0.6419, toppling the kiwi from a two-week high.

The dollar was marginally higher against the euro at $1.1074 and a fraction stronger against a basket of currencies at 97.889.

The yen, regarded as a safe-haven by virtue of Japan’s status as the world’s biggest creditor, touched 108.37 per dollar, its highest since Friday, before settling at 108.47.

The United States and China have been locked in tit-for-tat tariff hikes that have dented the global economy.

· Hopes for progress on the dispute had risen overnight when Bloomberg reported that negotiations, which failed in May, would be considered a baseline in deciding what U.S. tariffs on China would be rolled back.

However they were dashed by another warning form U.S. President Donald Trump of more tariffs if talks collapse and by China’s stern response to the passage of two Hong Kong-related bills in the U.S. Senate.

The proposals — which have not passed the House — would require the U.S. to annually certify the protest-wracked city retained enough autonomy to qualify for trade concessions, and ban exporting crowd-control munitions to Hong Kong police.

China’s foreign ministry spokesman called it a blatant interference in China’s internal affairs, and said the U.S. faced “negative consequences” if it persisted.

“It’s another spanner in the works for the trade deal,” said Matt Simpson, senior market analyst at Gain Capital in Singapore. He added, though, that markets have become inured to this sort of back and forth after 18months of trade tensions.

The Chinese yuan — the currency most sensitive to the trade dispute — inched down to a two-week low of 7.0337 per dollar.

· China cut its new benchmark lending rate on Wednesday, as widely expected, moving to drive down funding costs and shore up an economy hurt by slowing demand and trade tariffs.

Elsewhere, the British pound extended an overnight drop after an inconclusive election debate between Conservative Prime Minister Boris Johnson, who leads in the polls, and Labour leader Jeremy Corbyn.

It weakened 0.1% to $1.2909 in Asian trade.

The release of the Fed minutes from October are the next major scheduled event for markets, with investors looking for insight into the reasoning for last month’s rate cut.

· An increasing number of governments and central banks are taking steps to boost economic growth — but those policies will be less effective if the U.S. and China don’t reach a “phase one” trade deal, a Morgan Stanley executive said on Wednesday.

The absence of that deal will prolong economic uncertainty globally, said Gokul Laroia, co-chief executive of Asia Pacific for Morgan Stanley. That uncertainty has caused businesses to hold back plans to invest and expand — a major reason behind slowing growth in many countries.

“A deal coupled with policy is much more impactful than just policy. And the effectiveness of whether it’s monetary or fiscal (policy) is a lot lower when you don’t have a trade deal done, and when you have an inherent amount of uncertainty hanging over the corporate world not just in Asia, but globally,” Laroia told CNBC’s Sri Jegarajah at the Morgan Stanley Asia Pacific Summit in Singapore.

· China and the United States are fighting the “wrong war” by imposing tariffs worth billions of dollars on each other, according to a senior executive at Beijing-based think tank.

Neither country will emerge victorious from the trade fight, said Victor Gao, vice president at the Center for China and Globalization, and a former translator for the late Chinese leader Deng Xiaoping.

Expectations that Beijing will give in to all of Washington’s demands, in exchange for the removal of U.S. tariffs on Chinese exports, was “indulging in fantasy,” Gao told CNBC’s Geoff Cutmore during a panel discussion at the East Tech West conference in the Nansha district of Guangzhou, China on Wednesday.

“China will not surrender to the United States as far as the trade war is concerned,” Gao said, adding that tariffs are being paid by American consumers and businesses, which would ultimately drag down productivity in the U.S.

· China’s foreign ministry on Wednesday criticized the U.S. after the Senate unanimously passed a bill supporting Hong Kong protesters.

The “Hong Kong Human Rights and Democracy Act” interferes in China’s domestic affairs, said foreign ministry spokesperson Geng Shuang, according to an online statement in Chinese.

China “strongly condemns and resolutely opposes” the act of interference, Geng said hours after the bill was passed.

That bill now proceeds to the House, which already approved its own version of the bill in October. The two chambers of Congress have to work out differences between their bills before it can be sent to President Donald Trump.

· The economy of the euro zone will not fall into a recession although it is growing less than expected and there will be a recovery in the next year or two, the European Central Bank’s chief economist Philip Lane said in an interview on Wednesday.

“The economy is growing less quickly than what we hoped. The dynamic is disappointing but not negative. We expect a recovery in the next year or two,” Lane told Italian daily la Repubblica.

Lane said the current inflation rate of 1% in the euro area was “unsatisfactory”.

He added that euro zone countries should take advantage of the current low interest rates to reduce their debt piles rather than “waste the additional resources for new expenses or cuts to taxes”.

· China cut its new benchmark lending rate on Wednesday, as widely expected, moving to drive down funding costs and shore up an economy hurt by slowing demand and trade tariffs.

The one-year loan prime rate (LPR) CNYLPR1Y=CFXS was lowered by five basis points to 4.15% from 4.20% at the previous monthly fixing. The five-year LPR CNYLPR5Y=CFXS was also lowered by the same margin to4.80% from 4.85%.

· China will revise its 2018 gross domestic product (GDP) estimate in the next few days to reflect an increase in the number of businesses and assets recorded in the last census, officials said.

· The last band of anti-government protesters trapped inside a besieged Hong Kong university were weighing a narrowing range of options on Wednesday, with some trying to escape through sewers, as police outside appeared ready to simply wait them out.

Reuters witnesses said fewer than 100 protesters remained inside the Hong Kong Polytechnic University after more than 1,000 were arrested since late on Monday.

· Oil prices slipped for a third day on Wednesday as a surge in U.S. stockpiles reinforced concerns about lackluster global economic growth, while hopes ebbed for any movement on the U.S.-China trade war.

West Texas Intermediate (WTI) crude futures CLc1 erased early gains to be down 6 cents, or 0.1%, at $55.15 a barrel by 0631 GMT, after falling more than 4% over the previous two sessions.

Brent crude futures LCOc1 were at $60.71 a barrel, down 20 cents, or 0.3%. Brent dropped 3.8% during the prior two sessions.