I. Yesterday’s News
International News

1. China on Friday announced its decision to impose additional tariffs of four different rates on 5,207 items of imported U.S. products worth 60 billion U.S. dollars. The rates of additional tariffs on such products will be 25 percent, 20 percent, 10 percent, and 5 percent, according to the Customs Tariff Commission of the State Council. "If the United States act willfully and puts its additional tariff measures into effect, China will instantly implement such tariff measures," the commission said. Meanwhile, the measures are expected to lower the impact on the domestic production and people's lives as much as possible, it said.

2. Nonfarm payrolls increased by 157,000 jobs last month. Economists polled by Reuters had forecast payrolls increasing by 190,000 jobs last month. The average workweek in July was 34.5 hours, in line with market consensus. Manufacturing payrolls rose by 37,000 jobs in July, against a forecast of 220,000. Private employers added 170,000 jobs, lower than economists’ forecast of an 189,000 increase. Average hourly earnings increased 0.3 percent, in line with market consensus. Government employment fell by 13,000 jobs in July.

3. IHS Markit's Euro Zone Composite Final Purchasing Managers' Index (PMI) fell in July to 54.3 from June's 54.9, matching an earlier preliminary estimate. Business activity in the euro zone lost some momentum at the start of the third quarter, hampered by a drop in new orders that sapped optimism in the private sector, a survey showed on Friday. But the pace of growth remained fairly robust, supporting European Central Bank plans to end its 2.6 trillion euro stimulus programme this year.

4. Bank of England Governor Mark Carney said on Friday Britain faces an "uncomfortably high" risk of leaving the European Union with no deal, comments that drove sterling to an 11-day low against the dollar. "The possibility of a no deal at the moment is uncomfortably high. It is highly undesirable, parties should do all things to avoid it," Carney said.

5. Japan is considering creating a sovereign wealth fund to invest in U.S. infrastructure projects and U.S.-Japan joint projects in third countries and will float the idea at two-way trade talks in Washington next week, the Nikkei daily reported on Friday. Tokyo is seeking ways to counter U.S. pressure for a bilateral free trade agreement (FTA) and head off a rise in tariffs on its auto exports when Economy Minister Toshimitsu Motegi meets U.S. Trade Representative Robert Lighthizer in Washington on Aug. 9.

Domestic News

6. China declared it will impose these new tariffs if the U.S. places more tariffs on Chinese imports, fueling concerns over intensification of conflicts between the two largest economies in the world. Donald Trump is considering the U.S. raise proposed tariffs on $200 billion of Chinese goods to 25 percent from the 10 percent rate his administration is currently mulling, the administration announced Wednesday.

7. China’s service sector growth has hit a four-month low in July, as new orders expanded at their weakest rate for over two-and-a-half years. In another blow, overall business confidence fell to its lowest level since November 2015 due to trad friction between China and U.S. The Caixin China Composite Output Index, which covers both manufacturers and service providers, also fell, pointing to a weaker expansion of China’s economy.

8. China's Unipec, the trading arm of state oil major Sinopec, has suspended crude oil imports from the United States due to a growing trade spat between Washington and Beijing, three sources familiar with the situation said on Friday. Chinese buyers had already slowed their purchases of U.S. oil to avoid a likely import tariff threatened by Beijing amid the escalating trade dispute between the world's two largest economies.

9. China's central bank said on Friday night it would require banks to keep reserves equivalent to 20 percent of their clients' foreign exchange forwards positions from Monday, in a move to stabilise the yuan currency after the yuan fell sharply against the dollar. The People's Bank of China (PBOC) said it would take counter-cyclical measures to keep foreign exchange markets stable.

II. Market Overview
FX
1. Global Market

The U.S. dollar was steady against a basket of peers on Friday after data showed U.S. job growth slowed more than expected in July, but tightening labor market conditions supported investors' expectations for two more interest rate hikes this year from the Federal Reserve. The dollar index, which measures the greenback against a basket of six other major currencies, was about flat on the day at 95.148, after dipping as low as 94.98. The index was up 0.5 percent for the week. Simmering trade-related tensions helped push the greenback 0.39 lower against the Japanese yen. The dollar was 0.49 percent lower against the offshore yuan. The Chinese currency has tumbled about 10 percent since early April in offshore markets as investors speculated that its weakness would be encouraged by the People's Bank of China to counter the impact of U.S. tariffs on its exports. Meanwhile, sterling slipped 0.09 percent after Bank of England Governor Mark Carney said there was an "uncomfortably high" risk of Britain leaving the European Union without a deal.

2. Home Market

China's yuan slumped 320 bps to 6.8620 against the greenback from the previous session’s 6.83, hitting the trough since May 25 2017. Its session low of 6.8965 hit the lowest since May 15 2017.

Precious Metals

Gold inched down to the lowest price in over one year after an upbeat assessment of the U.S. economy by the Federal Reserve and new trade tensions between Washington and Beijing boosted the dollar. The stronger dollar hurts gold because it makes bullion more expensive for buyers with other currencies. Higher bond yields meanwhile make non-yielding gold less attractive to investors. Spot gold closed at 1,207.56 an ounce. U.S. gold futures for December delivery settled down 0.6 percent at $1,220.10 an ounce.

Commodities
1.Crude Oil

Crude futures pulled back on Friday, giving up gains from the previous session as trade concerns weighed on the market and fueled concerns about demand. U.S. West Texas Intermediate (WTI) crude futures settled down 47 cents at $68.49 a barrel. Brent crude futures settled at $73.21 per barrel, down 24 cents from their last close. Both grades briefly traded down more than $1 a barrel. U.S. crude ended the week down 0.4 percent, while Brent has fallen 1.5 percent in the week so far.

2.Base Metals

Copper turned positive on Friday as the dollar lost ground after weaker-than-expected U.S jobs data, but ended the week lower as trade tensions between the United States and China weighed. Gains in metals were kept in check after China's Commerce Ministry said Beijing's new set of proposed import tariffs on $60 billion worth of U.S. goods were rational and restrained, warning it reserved the right of further countermeasures in the intensifying trade war. Benchmark copper on the London Metal Exchange ended 1.1 percent lower at $6,206 per tonne, after falling as low as $6,074.50. It touched a two-week low of $6,066 on Thursday.

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

The middle of U.S. yield curve fell faster than the short and long ends on Friday as China unveiled retaliatory tariffs on $60 billion of U.S.-made goods and the White House said President Donald Trump's resolve was firm on China trade matters. The five-, seven- and 10-year note yields all fell more than 3 basis points with the five- and seven-year yields both down 3.5 basis points from late Thursday. The benchmark 10-year note yield was last at 2.954 percent, down 3.2 basis points from Thursday and 6.2 basis points below the week's high of 3.016 percent. The two-year note yielded 2.649 percent, down 1.6 basis points from Thursday. The 30-year bond yield was 3.093 percent, down 2.8 basis points from Thursday's close.

2. Chinese bonds

Cash bonds in China’s interbank mark were little changed, while Treasury bonds pulled back after hitting highs. Bond market is expected to remain bullish on bearish sentiment over the uncertainties of trade wars, and ample liquidity. But uncertain economic outlook and policy trend are likely to keep cash bonds in consolidation in the near term.

Stock Market
1. U.S. Equities

U.S. stocks advanced on Friday as upbeat earnings helped investors shrug off heightened trade anxieties and weaker-than-expected July jobs growth. For the week, the S&P 500 and the Nasdaq gained ground, up 0.8 percent and 1.0 percent, respectively, while the Dow was essentially flat. The S&P 500 notched its fifth straight weekly gain, its longest such streak of the year. The Dow Jones Industrial Average rose 136.42 points, or 0.54 percent, to 25,462.58, the S&P 500 gained 13.13 points, or 0.46 percent, to 2,840.35 and the Nasdaq Composite added 9.33 points, or 0.12 percent, to 7,812.02.

2. Hong Kong Equities

Hong Kong shares edged lower on Friday, dragged down by fears of slowing growth in China, a vaccine scandal that weighed on healthcare shares and persistent worries over the Sino-U.S. trade war. The Hang Seng index fell 0.14 percent to 27,676.32, while the China Enterprises Index lost 0.37 percent to 10,693.79.

3. China Equities

China's Shanghai stock market lost 1 percent to an almost one-month low, extending losses to the third consecutive day. The Shanghai Composite index was down 27.58 points or 1 percent at 2,740.44, within distance of latest trough of 2,733.88 hit on July 5. For the week, the index lost 4.6 percent. The turnover of Shanghai A shares fell over 20 percent to 129 billion yuan from 169.5 billion yuan.