I. Yesterday’s News
International News

1. The number of Americans filing for unemployment benefits unexpectedly fell last week, suggesting that a strong economy was helping the labor market weather ongoing trade tensions between the United States and a host of other countries. Initial claims for state unemployment benefits slipped 6,000 to a seasonally adjusted 213,000 for the week ended Aug. 4, the Labor Department said. Data for the prior week was revised to show 1,000 more applications received than previously reported. July's unchanged reading in the PPI. In the 12 months through July, the PPI advanced 3.3 percent. Other data on Thursday showed a solid increase in underlying producer prices in July. Labor market strength and rising inflation likely keep the Federal Reserve on track to raise interest rates in September for the third time this year. The dollar was trading higher against a basket of currencies. Prices for U.S. Treasuries rose while stocks on Wall Street were mixed.

2. The U.S. economy is performing "very well" with continued growth clearing the way for one or two more interest rate hikes in 2018, Chicago Federal Reserve Bank President Charles Evans said on Thursday in an interview in which he dismissed earlier worries about weak inflation. "It could be one or two more," following rate increases in April and June, said Evans, who as recently as December dissented against a Fed policy-setting committee decision to raise rates. "It is really a very good period of time for the economy and the setting of monetary policy," Evans said in the interview at the Chicago Fed's downtown headquarters, adding that the U.S. central bank was in a position to move rates slowly higher without evidence yet that it is either restraining growth and employment or risking a takeoff in price increases.

3. Lower export orders and car sales are likely to slow world trade growth in the third quarter, the World Trade Organisation (WTO) said, as a global tariff crusade by US President Donald Trump to protect American jobs begins to bite. As WTO’s head warned that global trade was threatened, its quarterly outlook indicator dipped to 100.3 from the 101.8 predicted in May for the second quarter. That signalled “an easing of trade growth in the coming months in line with medium-term trends,” it said.

4. North Korea on Thursday denounced U.S. calls for enforcing international sanctions despite its goodwill moves and said progress on denuclearization promises could not be expected if Washington followed an "outdated acting script." North Korea's foreign ministry said Pyongyang had stopped nuclear and missile tests, dismantled a nuclear test ground and returned the remains of some U.S. soldiers killed in the 1950-53 Korean War. Yet Washington was still insisting on "denuclearization first" and had "responded to our expectation by inciting international sanctions and pressure" it said. "As long as the U.S. denies even the basic decorum for its dialogue partner and clings to the outdated acting script which the previous administrations have all tried and failed, one cannot expect any progress in the implementation of the DPRK-U.S. joint statement including the denuclearization," the ministry said.

5. Tesla Inc's board has not yet received a detailed financing plan from CEO Elon Musk, and is seeking more information about how he will take the U.S. electric car maker private in a proposed deal worth $72 billion, people familiar with the matter said on Thursday. While Tesla's board has held multiple discussions about Musk's proposal, which first became public on Tuesday, it has not yet received specific information on who will provide the funding, one of the sources said. The board expects to make a decision on whether to launch a formal review of Musk's proposal in the coming days, and is speaking to investment bankers about hiring financial advisers to assist it in its review in such scenario, the sources said.

Domestic News

6. China's consumer inflation accelerated to a four-month high, beating economists’ forecast due to seasonal factors in summer vocation. Yearly growth of factory gate price inflation cooled slightly on the base effect. In short, inflation won't be too much of a concern as its growth is moderate. But inflation pressure shall be closely watched amid rising infrastructure investment and trade friction with the United States.

7. China’s government views U.S.-China trade war inevitable, as the U.S strategy in this zero-sum game will not be altered for China’s will, People’s Daily said. China has to drop off its fantasy and fight for its own interests.

8. Foreign direct investment (FDI) in China's financial institutions resulted in an 881 million U.S. dollar net inflow in the April-June period, extending net inflow for the fifth consecutive year, according to the State Administration of Foreign Exchange (SAFE). The figure was $798 million in the first quarter.

II. Market Overview
FX
1. Global Market

The dollar rose against most major currencies on Thursday in thin summer trading, as investors bet global trade tensions and a robust American economy would continue to support the U.S. Currency. Sterling on Thursday continued to slide, hitting $1.2819. The dollar index was up 0.4 percent at 95.454. Thursday's big mover was the New Zealand dollar, which fell nearly 2 percent to US$0.6613. The Turkish lira touched a record low against the dollar, weakening some 2.5 percent from Wednesday's close.

2. Home Market

China's yuan rose against the greenback in the morning session, while the midpoint rate inched down. China’s July inflation data had a limited impact on the market. A rebounding overnight euro and reversed spread between offshore and onshore yuan boosted bullish sentiment, and dampened institutions’ appetite to long the dollar. Investors shall closely watch the dollar index and China-U.S. trade friction.

Precious Metals

Gold was near flat on Thursday after two straight sessions of gains as a stronger U.S. dollar index weighed on upside momentum, though the precious metal took some comfort from a steadier Chinese currency. Spot gold was flat at $1,211.97 per ounce. U.S. gold futures for December delivery settled down $1.10, or 0.1 percent, at $1,219.90 per ounce. Silver rose to $15.412 an ounce, while platinum was unchanged at $830.24. Both earlier hit six-day highs at $15.51 and $839.90, respectively.

Commodities
1.Crude Oil

Crude prices settled slightly lower on Thursday, extending the previous session's losses as the escalating China-U.S. trade dispute casts doubt over the outlook for oil demand. Brent crude futures fell 21 cents to settle at $72.07 a barrel. U.S. crude fell 13 cents to $66.81 a barrel.

2.Base Metals

Aluminium prices hit six-week highs on Thursday after a strike at Alcoa's alumina refineries in Australia and warnings of shutdowns by Rusal revived concern about supply shortages. Benchmark aluminium on the London Metal Exchange (LME) ended down 1.3 percent at $2,078 a tonne on profit-taking after the New York open. Earlier it touched $2,147.50, its highest since June 29. Copper ended up 0.8 at $6,225 a tonne.

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

U.S. Treasury yields declined on Wednesday as average demand at a record-setting $18 billion 30-year bond auction supported the view investors are willing to own U.S. government debt even as its borrowing needs will grow further. The latest 30-year issue was the final part of this week's $78 billion in the government's quarterly debt refunding which was estimated to raise nearly $40 billion in new cash. At 1819 GMT amid light trading volume, benchmark 10-year Treasury yield was down 3 basis points at 2.933 percent, while the 30-year yield was down 4 basis points at 3.079 percent.

2. Chinese bonds

Yields of cash bonds in China’s interbank mark rose on Thursday, while the Treasury bonds fell sharply. China's consumer inflation accelerated to a four-month high, fueling expectations for higher inflation. A surging stock market also hit safe-haven sentiment. Recent data showed resilience in economic fundamentals. Investors shall closely watch updated data on credit.

Stock Market
1. U.S. Equities

The S&P 500 and Dow ended down slightly on Thursday as gains in Apple and Amazon were offset by losses in energy and financial shares. The Dow Jones Industrial Average fell 74.52 points, or 0.29 percent, to 25,509.23, the S&P 500 lost 4.12 points, or 0.14 percent, to 2,853.58 and the Nasdaq Composite added 3.46 points, or 0.04 percent, to 7,891.78.

2. Hong Kong Equities

Hong Kong's main Hang Seng index ended higher on Thursday, with investors buying high-tech shares amid talks of possible government support for Chinese technology companies. The Hang Seng index was up 248.16 points or 0.88 percent at 28,607.30 points. The Hang Seng China Enterprises index rose 1.09 percent to 11,019.93. The sub-index of the Hang Seng tracking IT sector rose 2.61 percent, the financial sector was 1.07 percent higher, and the property sector was down 0.04 percent.

3. China Equities

Shanghai stocks jumped 1.8 percent, regaining the previous session’s ground, lifted by tech sector, and middle & small caps on signs the government may offer the sector more support. China's securities regulator said that it would push forward restructuring. Technology shares gained after China said it would set up a National Science and Technology Leading Group. The Shanghai Composite Index surged 50.31 points to 2,794.38, up 1.83 percent. The turnover of Shanghai A shares rose to 150.9 billion yuan from 139.7 billion yuan.