Dollar and yen edged higher as trade negotiations dry up

On Wednesday, the USD and the yen- the safe-haven ticked higher, although not so much because a lack of clarity on the trade deal kept investors cautious.

The U.S. Fed Reserve is expected to release minutes for the last policy meeting at 1900 GMT, but ahead of it, traders are concerned about progress for the trade negotiations.

More optimistic reports are hinting that talks were getting down to nuts and bolts were offset by the rising tension between the two superpowers over Hong Kong.

The U.S. Senate approved bills to protect human rights in Hong Kong drew a sharp rebuke from China.

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

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

The safe-have yen by virtue of Japan being the world's biggest creditor touched 108.37 per dollar -its highest since Friday, before the settling at 108.47.

Mixed messages from trade war negotiations

"It's a very slightly risk-averse day. There's a slightly cautious tone and mixed messages from the trade war negotiations." " said Westpac F.X. analyst Imre Spitzer. "

The U.S. and China have been caught up in tit-for-tat tariff hikes denting the global economy.

Bloomberg reports shed a light of hope to traders overnight. Bloomberg reported that the earlier failed negotiations in May would be a baseline in deciding whether the U.S. tariffs on China would be rolled back.

However, Trump's warning of more tariffs if talks collapse was another dash to the hopes. China's stern response to the passage of two Hong Kong- related bills in the U.S. Senate made it even worse.

The proposals have not passed the House. They will require the U.S. to annually certify the pretest-wracked city retained enough autonomy to qualify for trade concessions, 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. would face "negative consequences" if it persisted.

"It's another spanner in the works for the trade deal," said Matt Simpson, who is the senior market analyst at Gain Capital in Singapore.

The Chinese yuan- a currency most sensitive to the trade dispute, inched down to a two-week low of 7.0337 per dollar. China cut its new benchmark rate on Wednesday as widely expected.

The move was to drive down funding costs and shore up an economy hurt by slowing demand and trade tariffs.

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

The GBP weakened 0.1% to $1.2909 in Asia trade.

The release of the Fed minutes from October is the next major scheduled event for the markets. Investors are looking for insights into the reasoning for the last month's rate cut.