I. Yesterday’s News
International News

1. U.S. House Republicans said late on Thursday they had made progress toward passing a short-term extension of government funding to avert a politically embarrassing shutdown, after a day of tough negotiations and confusion when President Donald Trump offered mixed signals on the stopgap plan. For months, the Republican-controlled Congress has been struggling to fund the government, which is now operating on its third temporary funding extension since the 2018 fiscal year began on Oct. 1. Following an early evening meeting of conservative leaders, House Speaker Paul Ryan and his top lieutenants, House Majority Leader Kevin McCarthy proclaimed to reporters: "We're in very good shape" for passage on Thursday night. The growing opposition led some senators to discuss the possibility of a new approach: passing one- or two-day extensions of government funding to avoid a shutdown while lawmakers continue to negotiate.

2. U.S. homebuilding fell more than expected in December, recording its biggest drop in just over a year, likely as unseasonably cold weather at the end of the month disrupted the construction of single-family housing units. The steep drop in groundbreaking activity probably will be temporary against the backdrop of a tightening labor market. Other data on Thursday showed the number of Americans filing for unemployment benefits dropped to a 45-year low last week.

3. The U. S. Federal Reserve should raise interest rates about three times in both 2018 and 2019, Cleveland Federal Reserve Bank President Loretta Mester said on Thursday, a pace that is a bit faster than many of her fellow policymakers prefer. Mester's remarks on Thursday are likely her last public ones before Fed policymakers meet Jan. 30-31 to discuss interest rates. They are not expected to raise rates then, but to do so at their March meeting.

4. South Africa's central bank kept its benchmark repo rate unchanged at 6.75 percent on Thursday, saying that risks to inflation were still on the upside despite a recent strengthening of the rand currency. The rand strengthened against the dollar on Thursday's decision, as some investors had bet that the central bank would cut rates. Indonesia's central bank on Thursday kept its key interest rate unchanged, as expected, but pledged to accelerate planned changes of rules on reserve requirements.

5. Euro zone officials could pick a new European Central Bank vice president within weeks, kicking off two years of flux at the top of one of Europe's most vital institutions and previewing a tussle to replace ECB chief Mario Draghi in 2019. Germany is seen as eager to claim the presidency at last, two decades after the ECB's creation, but the hawkish views of its obvious candidate, Bundesbank chief Jens Weidmann, will count against him in some member states, euro zone sources say. First to go at the bank will be Vice President Vitor Constancio of Portugal in May, followed next year by bank supervisor Daniele Nouy, chief economist Peter Praet, Draghi himself, and executive board member Benoit Coeure.

Domestic News

6. According to the official growth figures released by the National Bureau of Statistics (NBS), China's economy to grow by 6.9 percent in 2017, reversing the downtrend of the world's second largest economy for the first time in seven years. The 6.8 percent growth in the fourth quarter eclipsed Reuters’ expectation of 6.7 percent. The reading in the first three quarters was 6.9 percent, 6.9 percent and 6.8 percent respectively.

7. China's housing market said goodbye to 2017 in a steady but slight growth, when home prices in bigger metropolises stabilised, while smaller cities gained some momentum boosted by year-end sales and relatively loose policy environment. After the new year, mild rule changes in some tier-2 cities spurred speculation on policy easing. But regulator denied the changes, saying key tone in regulation remained on track. According to the official growth figures released by the National Bureau of Statistics (NBS) on Thursday, new home prices in December rose 5.3 percent from a year earlier, up from November's 5.1 percent increase, and posting a growth for 27 straight months. The growth also expanded after narrowing down for a whole year. Average new home prices in China's 70 major cities rose 0.4 percent to a five-month high in December from the previous month, up from November’s 0.3 percent increase. It is also a consecutive growth for the 32nd month.

8. China’s investment in real estate development grew 7 percent year on year in 2017, 0.5 percentage point slower than a month earlier, the National Bureau of Statistics (NBS) said. The newly built floor space was up by 7 percent year on year, up from November’s 6.9 percent. 

9. China released a national air quality report in the period from January to December, covering 74 cities it monitors. The Ministry of Environmental Protection said the 10 cities with the worst air quality were Shijiazhuang, Handan, Xingtai, Baoding, Tangshan, Taiyuan, Xi'an, Hengshui, Zhengzhou and Jinan, of which 6 were in Hebei Province.

II. Market Overview
FX
1. Global Market

The U.S. dollar fell on Thursday as traders piled into the euro, yen, sterling and other major currencies, prompted by concerns over a possible U.S. government shutdown as lawmakers struggled to cobble together a federal budget deal. At 1944 GMT, the trade-weighted dollar index was down 0.44 percent at 90.513. It held above a three-year low of 90.104 touched on Wednesday. The euro hovered below its three-year peak against the greenback. It was up 0.48 percent at $1.2242. The dollar was down 0.23 percent at 111.02 yen, while the pound was up 0.45 percent at $1.3888.

2. Home Market

China's yuan slipped against the U.S. Dollar along with the the central bank's midpoint rates on Thursday morning, as the latter bounced off a 25-month high. Dovish comments from the European Central Bank added to solid support at key marks in sending the dollar index higher, but appetite for forex was limited. Yuan is expected to extend gains, due to heavy demand for forex settlement after it crossed below 6.44 per dollar, traders said.

Precious Metals

Gold was flat in a narrow range on Thursday, first dipping as the dollar rose and then rising as the dollar moved lower, but bullion's gains were limited by higher U.S. Treasury yields. Financial market players were concerned about a possible U.S. government shutdown, but this did not move gold very much. Spot gold was slightly down at $1,327.10 an ounce. Earlier in the session, it touched its lowest since Jan. 12 at $1,323.70. U.S. gold futures for February delivery settled down $12, or 0.9 percent, at $1,327.20 per ounce.

Commodities
1.Crude Oil

Oil was little changed on Thursday, as prices eased early in the session, but were supported by a record drawdown of U.S. crude stockpiles at the Cushing, Oklahoma delivery hub. The market remains wary that OPEC-led output cuts will trigger price hikes that will increase supply from the United States. Crude is just below its highest price since December 2014, supported by supply cuts led by the Organization of the Petroleum Exporting Countries and concern that unrest in producer nations such as Nigeria could further curb output. Brent crude, the global benchmark, settled down 7 cents at $69.31 a barrel. On Monday it touched $70.37, the highest since December 2014. U.S. crude was down 2 cents at $63.95, having hit its highest since December 2014 on Tuesday.

2.Base Metals

Copper rose on Thursday as a robust performance by China's industrial sector helped to lift the biggest metal consumer's economic growth in the fourth quarter. Benchmark copper closed 0.6 percent higher at $7,076 a tonne. Aluminium ended 2.2 percent up at $2,241 a tonne, lead rose 2.5 percent to $2,610.

U.S. Treasuries
1. U.S. Bonds

Yields on U.S. 10-year notes reached a 10-month high on Thursday after China reported fourth-quarter growth that accelerated for the first time in seven years. After a week abutting 2.60 percent, the 10-year U.S. Treasury yield passed that mark to hit its highest level since March 2017. Two-year yields were 2.048 percent, after hitting 2.060 percent earlier in the day, the highest since September 2008.

2. Chinese bonds

Cash bonds in China’s interbank bond market remained weak on Thursday morning, with yields of major interest rates debts rising almost 2 bps. Heavy selling from institutions fueled bearish sentiment, traders said. Some institutions expected upbeat GDP and economic data in December.

Stock Market
1. U.S. Equities

Wall Street fell on Thursday as losses in industrials and interest-rate sensitive sectors offset marginal gains in tech stocks. The Dow Jones Industrial Average fell 97.84 points, or 0.37 percent, to 26,017.81, the S&P 500 lost 4.53 points, or 0.16 percent, to 2,798.03 and the Nasdaq Composite dropped 2.23 points, or 0.03 percent, to 7,296.05.

2. Hong Kong Equities

Hong Kong stocks rose to a fresh peak on Thursday, led by telecommunications and financial firms. The China Enterprises index HSCE, which tracks major Chinese firm listed in Hong Kong, extended gains after data showed China's Q4 economic growth beats expectations.  At close of trade, the Hang Seng index was up 138.53 points or 0.43 percent at 32,121.94. The Hang Seng China Enterprises index rose 1.76 percent to 13,094.92.

3. China Equities

Chinese stocks rose for the third consecutive day on Thursday, renewing an over two-month high, led by bank and steel sector. But individual stocks diverged.