I. Yesterday's News
1. The International Monetary Fund on Monday raised its forecast for China's economic growth this year by 0.3 percentage points to 6.5 percent, on expectations of continued policy stimulus. At the same time, it downgraded India's growth outlook by 0.4 percentage points to 7.2 percent as consumption in Asia's third-largest economy takes a hit from the government's recent decision to abolish large currency notes. The IMF warned of the risks to China's economy of a sharp slowdown or disruptive adjustment as the government has been slow to tackle high corporate debt, with capital outflows also potentially exacerbating pressures. The IMF maintained its forecast that global growth will pick up to 3.4 percent this year and 3.6 percent in 2018 from the 2016 estimate of 3.1 percent. The International Monetary Fund on Monday said the U.S. economy would grow faster than previously expected in 2017 and 2018 based on the incoming Trump administration's tax and spending plans, but it kept its global growth forecasts unchanged due to weakness in some emerging markets.

2. Just as London appears to be coming round to the idea that it will need a temporary transitional agreement with Brussels to smooth its exit from the European Union, it may find the position of European leaders has hardened. For months the working assumption in Brussels has been that it would be impossible to manage Britain's exit from the EU by a 2019 deadline without a temporary transitional deal to govern trade terms until a final arrangement can be hammered out. But with Prime Minister Theresa May lately softening her "Brexit means Brexit" rhetoric to emphasize the need to avoid forcing businesses off a "cliff edge", the positions of European leaders only seem to have hardened. British Prime Minister Theresa May's 12 priorities for Brexit will include leaving the European Union's single market and customs union, the Telegraph newspaper reported on Monday. May is due to make a long-awaited speech on Tuesday detailing her plan for upcoming Brexit negotiations, in which she will set out her 12 negotiating objectives.

3. Saudi Arabia will adhere strictly to its commitment to cut output under the global agreement among oil producers, its energy minister said on Monday. Iran's oil minister said that he was confident the OPEC and non-OPEC members would commit to the output cut deal agreed in November, noting that prices of oil would rise further as a result. But Falih said producers were unlikely to extend the deal beyond six months due to the enforcement and market recovery.

4. The Bank of Japan raised its economic assessment for three of the country's nine regions and maintained its optimism on the remaining areas in a quarterly report, underscoring brighter prospects for the world's third-largest economy. The upgrade reflected a pick-up in private consumption and demand from emerging Asian economies.

II. Market Overview
FX
Sterling skidded to its lowest levels - bar a "flash crash" in October - in 32 years on Monday, hit by fears that Prime Minister Theresa May will say on Tuesday Britain is set for a "hard" Brexit out of the EU and its single market. The pound plunged to $1.1983 in early trade in Asia, depths not seen since a short-lived "flash crash" briefly wiped 10 percent off the currency's value in a thin market on Oct. 7. The euro climbed as much as 1.5 percent against the pound to a two-month high of 88.53 pence, before retreating to 87.85 pence, still up 0.7 percent on the day. Against the yen, which is perceived as a safe haven, sterling fell as much as 2.3 percent to a two-month low of 136.48 yen. The Japanese currency gained broadly as a risk-off mood permeated through markets, hitting a six-week high of 113.61 yen to the U.S. Dollar. The U.S. index was up 0.4 percent against a basket of currencies.

Precious Metals
Gold climbed on Monday to its highest in more than seven weeks on buying fuelled by political uncertainty after comments by U.S. President-elect Donald Trump on NATO and China. Spot gold was up 0.5 percent at $1,202.8 an ounce after hitting $1,207.86, its highest since Nov. 23. U.S. gold futures were up 0.5 percent at $1,202.60.

Commodities
1.Crude Oil
Oil prices settled up on Monday, as Saudi Arabia's commitments to reducing production offset a report forecasting U.S. output would again rise this year. Benchmark Brent crude oil was up 41 cents a barrel, or 0.7 percent, at $55.86 and U.S. West Texas Intermediate crude rose 27 cents, or 0.5 percent, to $52.64 a barrel.

2. Base Metals
London copper prices eased on Monday as some investors took profits following hefty gains last week on the back of strong economic data from the United States and China. Three-month copper on the London Metal Exchange had slipped 0.17 percent to $5,899 a tonne. It rose more than 5 percent last week. The most-traded copper contract on the Shanghai Futures Exchange was up 0.95 percent at 47,950 yuan a tonne.

U.S. Treasuries
U.S. markets are closed on Martin Luther King Jr. Day.

Stock Market
1. U.S. Equities
U.S. markets are closed on Martin Luther King Jr. Day.

2. Hong Kong Equities
Hong Kong stocks suffered their biggest one-day fall in a month on Monday, hurt by a slump in mainland Chinese companies listed in the city and on concerns over the impact of Britain's exit from the European Union. The benchmark Hang Seng index dropped 1.0 percent, to 22,718.15 points. The Hong Kong China Enterprises Index, which tracks mainland-based companies, was down a sharper 1.2 percent, to 9,666.09 points.