By Anneken Tappe

As expected, U.S. stops short of labeling China a currency manipulator

Major currencies were once again trading in tight ranges ahead of U.S. economic data, as investors digested the Treasury's report on foreign exchange practices and Wednesday's Federal Reserve meeting minutes.

The Treasury refrained from labeling China a currency manipulator (http://www.marketwatch.com/story/us-treasury-declines-to-label-china-a-currency-manipulator-but-says-recent-yuan-weakness-is-a-concern-2018-10-17) in its biannual report on foreign exchange practices released late Wednesday, saying intervention by the People's Bank of China has been limited this year. But it did issue a stern warning about yuan weakness, which has seen it decline by around 7% versus the dollar in 2018.

Analysts have largely attributed the yuan's weakness versus the dollar in the year to date to market forces, including the emerging market selloff over the summer, as opposed to willful devaluation as a tactic in the U.S.-China trade war. A weaker currency makes a country's goods more competitive on the global market.

Don't miss:Here's why investors shouldn't take their eyes off China's yuan (http://www.marketwatch.com/story/heres-why-investors-shouldnt-take-their-eyes-off-chinas-yuan-2018-10-17)

The yuan weakened following to the report. In Beijing, the Chinese currency briefly touched its weakest level since January 2017 after the report's release. One buck last fetched 6.9396 yuan , up 0.2%. In the offshore market, the yuan was at its lowest level since August on Thursday, with one dollar buying 6.9447 yuan , up 0.2%.

The currency weakness also came as Chinese stocks hit four-year lows (http://www.marketwatch.com/story/asian-markets-pull-back-led-by-sharp-declines-in-china-2018-10-17) to lead Asian equities to the downside. The Shanghai Composite dropped nearly 3%, while the Shenzhen Composite lost 2.7%.

In other China news, the country's gross domestic product data for the third quarter -- expected at 6.6% on the year -- is due at 10 p.m. Eastern.

Meanwhile, the ICE U.S. Dollar Index was slightly subdued on Thursday little changed in positive territory at 95.612.

Economic data showed first-time jobless claims for the week ended Oct. 13 roughly in line with expectations (http://www.marketwatch.com/story/jobless-claims-drop-5000-to-210000-in-mid-october-2018-10-18), and the Philly Fed manufacturing index beating expectations in October.

Market participants were still digesting Wednesday's Federal Reserve meeting minutes (http://www.marketwatch.com/story/federal-reserve-minutes-indicate-interest-rates-will-have-to-rise-high-enough-to-slow-down-the-economy-2018-10-17), which showed policy makers thought interest rates had to rise until the economy turned. This walked back some of the perceived dovishness from the last policy update in which the word "accommodative" was removed from the statement.

"The FOMC minutes may be being termed 'hawkish', but in truth revealed little outside of some concern about a rising U.S. dollar on [emerging-market] countries, but this is hardly news, of more interest was the concern expressed about leveraged loans and prices in some other assets classes, which re-emphasizes our oft made point that the Fed is watching overall financial conditions very closely, and for the time being this sustains their hawkish lean," wrote Marc Ostwald, global strategist and chief economist at ADM Investor Services International.

In Brussels, the latest European Union summit on the topic of Brexit kicked off Wednesday, with the possible extension of the post-Brexit transition period to three years seemingly at the center of talks. This extension would give the U.K. an additional year to agree a trade deal with the EU and is considered an olive branch in the negotiations.

The euro was slightly stronger at $1.1508, up from $1.1502 late Wednesday, while the British pound bounced around between positive and negative territory, last trading at $1.3102, down from $1.3114.

(END) Dow Jones Newswires

October 18, 2018 08:54 ET (12:54 GMT)