I. Yesterday's News
International News
1. U.S. President Donald Trump ousted recently hired White House communications chief Anthony Scaramucci on Monday over an obscene tirade in the latest staff upheaval for the six-month-old administration. The dollar index, which measures the greenback against a basket of six major currencies, hit its lowest since early May 2016 of 92.786 after the news of Scaramucci's departure. The dollar also hit a more than six-week low against the yen of 110.22 yen. The euro extended gains to trade as much as 0.8 percent higher against the dollar.

2. Contracts to buy previously owned U.S. homes rebounded 1.5 percent in June after three straight monthly declines, but the housing market remained constrained by a shortage of properties available for sale. Other data on Monday showed that factory activity in the Midwest slowed this month after hitting a three-year high in June, with manufacturers reporting declining orders. The PHLX housing index fell slightly after the data and the U.S. dollar hit a session low against a basket of currencies. U.S. stocks were trading mixed and prices of U.S. Treasuries were lower.

3. Euro zone inflation was stable in July but its core measure, which is closely watched by the European Central Bank, went up to a four-year high against market expectations of a drop, flash estimates released by Eurostat showed on Monday. In a separate release, the European Union's statistics office said unemployment in the 19-country currency bloc dropped to its lowest level since 2009, confirming the robust recovery of the euro zone's economy and giving the ECB more ground for tightening its monetary policy in autumn. The euro hit more than 2-1/2-year peaks against the dollar earlier in the session on month-end buying and euro zone inflation data that kept expectations for a more hawkish European Central Bank alive. Southern European government bond yields slipped.

4. The automatic right of European Union citizens to live and work in Britain will end in March 2019 with Brexit, Prime Minister Theresa May's spokesman says, after her ministers publicly differed over the shape of the divorce with the EU. But the Archbishop of Canterbury said the chance of this was "infinitesimally small" because political wrangling will prevent the detailed work that is needed.

5. Southern European government bond yields slipped on Monday as euro zone inflation for July remained well short of the European Central Bank target, thereby weakening the case for a rapid unwinding of monetary stimulus. Italian, Spanish and Portuguese bonds, seen as the biggest beneficiaries of central bank stimulus, outperformed the rest of the market, dropping 3-7 basis points. Higher-rated government bond yields were broadly flat. The gap between Portuguese and German 10-year borrowing costs tightened to its narrowest level since January 2016, at 232 basis points.

Domestic News
6. China hit back on Monday after U.S. President Donald Trump tweeted he was "very disappointed" in China following North Korea's latest missile test, saying the problem did not arise in China and that all sides need to work for a solution. Russia said on Monday, "We view as groundless attempts undertaken by the U.S. and a number of other countries to shift responsibility to Russia and China.” A White House statement said North Korea poses a grave and growing direct threat.

7. Beijing's official manufacturing purchasing managers' index (PMI) and non-manufacturing PMI dipped to 51.4 and 54.5 in July after a surprisingly upbeat economic data, down 0.3 percent ad 0.4 percent respectively compared with the previous month. That was basically flat with the average reading in the first half, and held above 50 that separates expansion from contraction. But investors still worried that Chinese economy would expand at a slower pace in the second half of this year.

8. China's official People's Daily said de-capacity is a hard process, while not to do that would pose even more challenging situations. The so-called supply-side structural reforms is a long-term strategy to boost China's economic upgrading, instead of a political expediency. We shall not miss the best opportunity for some small benefits.

9. Chinese President Xi Jinping said at a grand rally marking the 90th founding anniversary of the People's Liberation Army Tuesday that China needs a strong military more than ever, urging building the People's Liberation Army (PLA) into world-class armed forces, quoting "our heroic armed forces have the confidence and capability to defeat all invading enemies and safeguard national sovereignty, security and development interests."

10. Qian Keming, China's vice minister of Commerce, said China's foreign trade faces a mostly positive environment in the second half of the year, despite of difficulties and challenges in foreign trade, and import & export. Qian also said that China's outbound direct investment (ODI) in the first six months of 2017 plummeted mainly due to a high comparison base, continued improvement in China's economy, rising uncertainties abroad and government measures to curb irrational investment.

II. Market Overview
FX
1. Global Market
The euro hit more than 2-1/2-year peaks against the dollar earlier in the session on month-end buying and euro zone inflation data that kept expectations for a more hawkish European Central Bank alive. It extended gains to trade as much as 0.8 percent higher against the dollar on the day after the New York Times reported U.S. President Donald Trump had decided to remove Scaramucci. The euro was last on track to gain 3.6 percent against the dollar in July to mark its biggest one-month percentage gain since March 2016. The dollar index, which measures the greenback against a basket of six major currencies, hit its lowest since early May 2016 of 92.786 after the news of Scaramucci's departure. Doubts surrounding the likelihood of Trump realizing his pro-growth agenda, including tax reform, have hurt the dollar and contributed to the dollar index's roughly 2.9 percent decline in July. That decline would be the biggest monthly drop since March 2016. The dollar also hit a more than six-week low against the yen of 110.22 yen. The dollar was set to fall 1.9 percent against the yen to mark its biggest one-month percentage decline in six months.

2. Home Market
China's yuan rose against the dollar in the morning session on Monday, tracking the midpoint rates that hit a nine-month high. Sluggish U.S. data and political uncertainties dampened the dollar. But bargain-hunting by some institutions capped yuan's gains after the currency hit 6.7250.

Precious Metals
Gold hit its highest in almost seven weeks on Monday, boosted by a struggling dollar and U.S. economic data that cast doubt on whether the Federal Reserve will raise rates again this year. Spot gold was down at $1,269.05 an ounce, after rising to its highest since June 14 at $1,270.98. It is on course for a 2.1 percent rise this month, its strongest monthly performance since February. U.S. gold futures settled down 0.1 percent at $1,266.60.

Commodities
1.Crude Oil
Oil prices rose to two-month highs on Monday, ending the strongest month of the year for crude futures, boosted in part by expectations of U.S. sanctions against Venezuela's oil sector and as supply concerns have waned in recent weeks. Benchmark Brent crude rose 0.38 percent to settle at $52.72. Brent earlier hit $52.92 a barrel, its highest since May 25. U.S. light crude oil rose nearly 1 percent to settle $50.17 a barrel.

2.Base Metals
The price of copper hit a two-year peak on Monday on upbeat manufacturing data in top consumer China, while nickel hit a near four-month high on renewed supply worries and soaring steel prices. London Metal Exchange copper closed up 0.7 percent at $6,369 a tonne, having hit $6,430 earlier, the highest since May 2015. Nickel ended up 0.1 percent at $10,270, having earlier hit its highest since early April at $10,355.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields rose on Monday before a heavy week of data, which will culminate in Friday's employment report for July, and as investors waited on Wednesday's refunding announcement for the coming quarter. Benchmark 10-year notes fell 2/32 in price to yield 2.292 percent, up from 2.287 percent on Friday.

2. Chinese bonds
China's cash bond yields rose slightly in the morning session on Monday, while Treasury bond futures edged down. Bank regulator said at weekend it will reinforce regulation, adding to month-end tight liquidity. In the meanwhile, relatively strong economic fundamentals also contribute to weak cash bonds.

Stock Market
1. U.S. Equities
The Dow Jones Industrial Average hit a record closing high on Monday, helped by Boeing, while selling in Facebook, Alphabet and other technology companies checked the S&P 500 and pulled the Nasdaq lower. The Dow Jones Industrial Average rose 60.81 points or 0.28 percent to end at 21,891.12 points and the S&P 500 lost 1.8 points or 0.07 percent to 2,470.3. The Nasdaq Composite dropped 26.55 points or 0.42 percent to 6,348.12. In July, the S&P 500 rose 1.9 percent, the Dow added 2.5 percent and the Nasdaq gained 3.4 percent.

2. Hong Kong Equities
Hong Kong stocks closed at a 25-month high on Monday after completing a seventh-straight month of gains, powered by strength in dual-listed resource firms which forecast rises in first-half earnings. The Hang Seng index rose 1.3 percent, to 27,323.99, while the China Enterprises Index gained 0.7 percent, to 10,827.84 points. For the month, HSI was up 6.1 percent, while HSCE gained 4.5 percent.

3. China Equities
China's Shanghai Composite Index extended gains to the fourth consecutive day, hitting a 3-1/2-month closing high in expanded volume boosted by cyclical names. Coal and nonferrous metals regained ground after correction last week, lifted by steadied macro economy and rising futures prices. The index is expected to test the key mark of 3,300.