I. Yesterday's News
International News
1. President Donald Trump declared China the "grand champions" of currency manipulation on Thursday, just hours after his new Treasury secretary pledged a more methodical approach to analyzing Beijing's foreign exchange practices. In an exclusive interview with Reuters, Trump said he has not "held back" in his assessment that China manipulates its yuan currency, despite not acting on a campaign promise to declare it a currency manipulator on his first day in office.

2. U.S. Treasury Secretary Steven Mnuchin on Thursday laid out an ambitious schedule to enact tax relief for the middle class and businesses by August, but said the Trump administration was still studying a proposed new border tax on imports. He acknowledged later on Fox Business Network that such a timeline was "very aggressive."

3. The number of Americans filing for unemployment benefits rose slightly by 6,000 last week but the four-week average of such claims, considered a better gauge, fell to a 43-1/2-year low in a sign of a strengthening labor market. A separate report showed house prices increased 6.2 percent in December amid strong demand for housing even as mortgage rates rose. The reports highlighted strength in the economy that could allow the Federal Reserve to raise interest rates in the near-term.

4. There is no need for the European Central Bank to change interest rates this year, Austrian central bank Governor Ewald Nowotny said on Thursday, confirming market expectations for steady rates well into next year or possibly longer. Nowotny added that if the new US administration bumps up budget spending, that would likely lead to higher inflation and interest rates, firming the dollar and putting exporters at a disadvantage, the exact opposite of the government's stated policy aim.

5. Europe's economic recovery remains fragile, leaving little room for complacency, with risks exacerbated by political uncertainty before key elections, European Central Bank chief economist Peter Praet said on Thursday, Reuters reported. Praet warned that the recovery was dependent on substantial support from the ECB. Britain's exit from the European Union will have a significant impact on bilateral trade, the European Central Bank's chief economist said, warning also against blind optimism as things could turn "nasty quite quickly".

Domestic News
6. Chinese leaders pledged monetary policy would be "prudent and neutral" in 2017. Ma Jun, chief economist at the People's Bank of China, said that policy would "prevent rapid rises in leverage ratios and avoid asset bubbles, under the premise of maintaining reasonable economic growth and basically stable inflation". China's consumer prices are likely to rise around 2.5 percent this year, Ma said.

7. China's State Council will further ease access restrictions on private investment, encouraging investment funds dominated by private capital and operating under market mechanisms, according to a statement released after a State Council executive meeting, chaired by Premier Li Keqiang. There will be more financing channels in the equity and bond markets and collateral financing, enabling companies to use their intellectual property rights and rights to earnings as collateral to secure financing.

8. Chinese property prices are expected to remain stable in the first quarter of 2017, said Chen Zhenggao, Minister of Housing and Urban-Rural Development, claiming some success in property regulation, including in tier-1 cities. Efforts by China's real estate industry to destock have already yielded early success, said Chen.

9. China's individual income tax reform shall be pushed forward gradually on the basis of top design, in view of China's huge population, wide area, lack of social auxiliary facilities, and incomplete regulation conditions, policymakers from the Department of Taxation of the Ministry of Finance said, signalling that additional tax break on household spending will be added.

10. The draft amendment to the current corporate income tax, has been submitted to the legislature, or Standing Committee of the National People's Congress, People's Daily reported. It stipulates that if a company's contribution to social welfare funding exceeds 12 percent of annual profits, the balance can be deducted from its taxable income over the following three years.

II. Market Overview
FX
1. Global Market
The U.S. dollar fell against a basket of major currencies on Thursday on a perceived lack of progress on U.S. tax reform, while Wednesday's more dovish-than-expected Federal Reserve meeting minutes continued to weigh on the greenback. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.2 percent at 101.010. The dollar fell as much as 0.6 percent against the yen to a two-week low of 112.55 yen, while the euro rose as much as 0.4 percent against the dollar to $1.0595. The dollar fell as much as 1.5 percent against the Mexican peso to 19.6108 pesos, the lowest since Nov. 9.

2. Home Market
China's yuan pared early gains to around 6.8795 against the U.S. Dollar with the  central parity rates snapping a three-day losing streak. Some proprietary funds squared their positions on highs, sending yuan's prices lower and dampening market sentiment.  

Precious Metals
Gold prices rose 1 percent to a 3-1/2-month high on Thursday after minutes from the latest Federal Reserve policy meeting further dampened expectations for an interest rate hike in March, lowering U.S. bond yields and pressuring the dollar. Spot gold was last at $1,249.34 an ounce. U.S. gold futures for April delivery settled up 1.5 percent at $1,251.40.

Commodities
1.Crude Oil
Oil prices rose on Thursday but gains were pared after U.S. government data showed a seventh straight build in crude stocks, suggesting high inventories could undermine OPEC's move to cut output. Benchmark Brent crude oil rose 74 cents a barrel to settle at $56.58. U.S. light crude traded up 86 cents at $54.45 a barrel.

2.Base Metals
Copper prices tumbled on Thursday as worries about demand in top consumer China resurfaced after the country's housing minister suggested moves were afoot to stabilise the property market, while a firm dollar reinforced negative sentiment. The benchmark copper futures contract on the London Metal Exchange ended down 3 percent at $5,859 a tonne, its biggest one-day fall since September 2015.

U.S. Treasuries
1. U.S. bonds
U.S. Treasury debt yields fell on Thursday as investors fretted about the lack of clarity in the Trump administration's policies and doubted whether its proposed reforms would have as big an impact as many initially thought they would. In afternoon trading, U.S. 10-year notes were last up 10/32 in price, yielding 2.382 percent. Yields fell as low as 2.379 percent, their weakest level since Feb. 9. U.S. 30-year bond prices rose 10/32, yielding 3.021 percent. U.S. two-year note prices were up 2/32, yielding 1.192 percent.

2. Chinese bonds
China's interbank money rates fell slightly, while government bond futures extended gains in the morning session following yesterday's strong rebound. The selling of tier-1 new bonds also suggested bullish market mood. Market sentiment recovered in the secondary market on liquidity easing and expectations over loosing policy.

Stock Market
1. U.S. Equities
U.S. stocks edged higher on Thursday, buoyed by energy stocks and a renewed pledge by President Donald Trump to chief executives of major U.S. companies to bring back millions of jobs to the United States. The Dow Jones Industrial Average rose 34.72 points, or 0.17 percent, to 20,810.32, the S&P 500 gained 0.99 points, or 0.04 percent, to 2,363.81 and the Nasdaq Composite dropped 25.12 points, or 0.43 percent, to 5,835.51.

2. Hong Kong Equities
Hong Kong stocks edged lower on Thursday, after the U.S. Federal Reserve meeting minutes showed some policy uncertainty even as there was broad consensus on rates having to rise further. The benchmark Hang Seng index dropped 0.4 percent, to 24,114.86, while the Hong Kong China Enterprises Index lost 0.2 percent, to 10,521.53.

3. China Equities
China's main stock indexes snapped a three-session winning streak to fell off a three-month high on Thursday. Lack of steam, the losses of major indexes picked up after the noon bell. Consolidation is expected to continue at current level with key driver missing and sectors rotating. The Shanghai Composite Index lost 9.84 points or 0.3 percent to 3,251.38 points. The trading volume of Shanghai A shares rose slightly to 236.5 billion yuan from 234.5 billion of the previous session.