I. Yesterday's News
International News
1. President Donald Trump's eldest son eagerly agreed last year to meet a woman he was told was a Russian government lawyer who might have damaging information about Democratic White House rival Hillary Clinton as part of Moscow's official support for his father, according to emails released on Tuesday. The emails, released by Donald Trump Jr., are the most concrete evidence yet that Trump campaign officials welcomed Russian help to win the election. Stocks fell, and the dollar hit a one-week low of 95.673 as the news jarred financial markets. While U.S. Treasury securities were weighed.

2. Two Fed officials cited low wage growth and muted inflation as reasons for caution on further interest rate increases. Fed Governor Lael Brainard supported the June rate rise and on Tuesday embraced the plan to reduce the balance sheet "soon," but suggested her support for any future rate increases will depend in part on how inflation shapes up. At a separate event on Tuesday, Minneapolis Federal Reserve Bank President Neel Kashkari said he finds it hard to believe that the U.S. economy is in danger of overheating when wage growth is so low.

3. President Donald Trump is increasingly unlikely to nominate Federal Reserve Chair Janet Yellen next year for a second term, and National Economic Council Director Gary Cohn is the leading candidate to succeed her, Politico reported on Tuesday, citing four people close to the process. Politico said sources in the White House, the Treasury Department and on Capitol Hill said that if Cohn decides he wants the job, he is likely to get it.

4. In the space of a fortnight, markets have ratcheted up their expectations for a rate hike in the euro area following comments from the ECB and other major central banks. Forward Eonia bank-to-bank rates, a closely followed gauge of the market's rate expectations, dated for the ECB meeting next July stand at minus 0.25 percent, well above the Eonia spot rate of minus 0.36 percent. Rounded, that gap implies markets are fully pricing in a 10 basis point hike in the ECB's currently minus 0.40 percent deposit rate by next July -- a move that was not anticipated a month ago. But over the next two years, only between two to three hikes are expected, leaving rates still in negative territory.

5. Bank of England Deputy Governor Ben Broadbent kept mum on his views about interest rates on Tuesday, prompting financial markets to assume he sees no pressing need to change. Sterling hit an 8-month low against the euro as a result. Monetary Policy Committee's newcomer Silvana Tenreyro, who replaced hike advocate Kristin Forbes this month, has also not spoken publicly.

Domestic News
6. The central government's State-owned enterprises posted better-than-expected net profits of 535.32 billion yuan in the first half of the year, the country's top SOE regulator said on Tuesday. The half-year profits represent a year-on-year growth of 18.6 percent, with double-digit growth each month. Profits in June reached 159.67 billion yuan, hitting a record high since the statistics became available.

7. Shanghai will launch housing development for “rent-only homes” and its 13th Five-Year Plan to ensure stable and healthy development of the housing market. The new policy will help stabilize the city's housing market, and pose significant challenge to housing developers as they are used to retail sales.

II. Market Overview
FX
1. Global Market
The dollar fell to a more than one-week low against a basket of major currencies on Tuesday, after U.S. President Donald Trump's eldest son released an email chain citing Russian support for his father before last year's U.S. Election. The dollar index, which tracks the greenback against six major rivals, traded down 0.31 percent at 95.673. The greenback, which touched a four-month high against the Japanese yen earlier in the session spurred by the recent rise in U.S. government bond yields, reversed course to fall 0.09 percent to 113.93 yen. The euro rose to a one-year high of $1.1475. The Canadian dollar slipped against its U.S. counterpart as traders awaited an interest rate hike decision by the Bank of Canada on Wednesday. The greenback gained against the New Zealand dollar as rising U.S. yields, soft commodity prices and a disappointing report on domestic credit card spending sent investors fleeing kiwi assets. Sterling fell to an eight-month low against the euro after the Bank of England Deputy Governor Ben Broadbent declined to back up recent hints from other policymakers at the central bank that suggested it may be moving toward raising interest rates.

2. Home Market
China's yuan fell modestly against the dollar in the morning session on Tuesday, tracking the midpoint rates. Trading was tight on lack of guidance and as external market was quiet due to public holidays. Yuan is expected to keep trading in a tight range in the near term.

Precious Metals
Spot gold rose on Tuesday, off the previous day's near four-month lows, as a drop in equities drove safe-haven buying and the U.S. dollar retreated. Spot gold closed at $1,217.31 per ounce, near Monday's $1,204.45, its lowest since March 15. U.S. gold futures for August delivery settled up $1.5, or 0.12 percent, at $1,214.70 per ounce.

Commodities
1.Crude Oil
Oil prices climbed more than 1 percent on Tuesday along with rising heating oil futures on reports showing cuts in U.S. oil production and declines in U.S. crude and European product stockpiles. Benchmark Brent futures rose 64 cents, or 1.4 percent, to settle at $47.52 a barrel. U.S. West Texas Intermediate crude also rose 64 cents, or 1.4 percent, to settle at $45.04 per barrel. U.S. heating oil futures, meanwhile, gained 1.6 percent on Tuesday, boosting the products crack spread, a measure of refinery margins, to the highest since late May.

2.Base Metals
Copper prices rose on Tuesday after a rapid build-up of inventories that has weighed on the market since late June halted and workers voted to strike at a mine in Chile, raising supply concerns. Stainless steel ingredient nickel also gained after Chinese steel prices reached 3-1/2 year highs, while zinc, used to galvanise steel, rose to its highest level since March. London Metal Exchange benchmark copper closed up 0.9 percent at $5,875 a tonne. Higher steel prices helped push benchmark LME nickel up 1.3 percent to close at $9,130 a tonne.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields slipped in choppy trading on Tuesday after Federal Reserve officials, on the eve of Fed Chair Janet Yellen's congressional testimony on monetary policy, expressed doubts about further interest rate hikes due to low inflation. Long-dated yields also dipped after President Donald Trump's eldest son released an email chain. In late trading, the benchmark 10-year Treasury note yielded 2.364 percent , down slightly from 2.371 percent late on Monday. Yields on U.S. Treasuries with maturities from 2 to 10 years were also modestly lower. U.S. 30-year yields were at 2.924 percent, compared with Monday's 2.923 percent.

2. Chinese bonds
China's bond market recovered mildly on Tuesday, with T-bond futures rising slightly in the morning session, while yields of interbank cash bonds dropping. The central bank's reverse repo started after more than two weeks, but posed limited impact on the market. Caution prevailed ahead of news of MLF renewal becomes clear.

Stock Market
1. U.S. Equities
U.S. stocks ended little changed on Tuesday in a session marked by knee-jerk reactions to events in Washington that drove investors to first worry. Stocks fell sharply in late-morning trading after emails disclosed by President Donald Trump's eldest son. But the market recovered later as U.S. Senate Republican leader Mitch McConnell announced a two-week delay in the Senate's August recess to provide more time to work on legislation and approve nominees, signaling prospects of progress on the Republican agenda. The Dow Jones Industrial Average closed up 0.55 point to 21,409.07, the S&P 500 lost 1.9 points, or 0.08 percent, to 2,425.53 and the Nasdaq Composite added 16.91 points, or 0.27 percent, to 6,193.31.

2. Hong Kong Equities
Hong Kong stocks extended this week's rally, posting their best day in four months on Tuesday, bolstered by strong gains among financial sector stocks. The Hang Seng Index rose 1.5 percent, to 25,877.64 points, while the China Enterprises Index gained 2.0 percent, to 10,416.20 points. An index tracking major financial plays rose 1.9 percent, mirroring strong gains in mainland peers.

3. China Equities
China's major indexes closed modestly on Tuesday, dampened by the GEM board and lower risk appetite. Financials, however, bucked the trend by the news of restarted reverse repo in the open market. The Shanghai Composite Index closed up 9.59 points or 0.30 percent at 3,203.04. The trading volume fell to 205.2 billion from yesterday's 222.6 billion.