I. Yesterday's News
International News
1. U.S. consumer prices rose slightly in July as higher food costs were partly offset by falling prices for a range of other goods, suggesting benign inflation that could persuade a cautious Federal Reserve to delay raising interest rates until December. The dollar index fell, while U.S equities rose mildly. The Labor Department said on Friday its Consumer Price Index edged up 0.1 percent last month after being unchanged in June. That lifted the year-on-year increase in the CPI to 1.7 percent from 1.6 percent in June. Economists had forecast the CPI rising 0.2 percent in July and climbing 1.8 percent year-on-year. Stripping out the volatile food and energy components, consumer prices gained 0.1 percent for the fourth straight month. The so-called core CPI rose 1.7 percent in the 12 months through July and has now increased by that margin for three consecutive months.

2. The U.S. economy will grow at an annual rate of 2.6 percent and 2.3 percent in the third and fourth quarter, slightly higher than previous forecast of 2.5 percent and 2.4 percent, according to a survey by the Federal Reserve Bank of Philadelphia. The core consumer prices will grow 1.8 percent in the third quarter and 2.1 percent in the fourth quarter, weaker than economists' forecast of 2.2 percent. The core PCE inflation is expected to average 1.6 percent in the third quarter and 1.8 percent in the fourth quarter, lower than previous projection of 1.9 percent.

3. IEA says strong oil demand growth helping market rebalance. World oil demand will grow more than expected this year, helping to ease a global glut despite rising production from North America and weak OPEC compliance with output cuts, the International Energy Agency said on Friday. The agency raised its 2017 demand growth forecast to 1.5 million barrels per day (bpd) from 1.4 million bpd in its previous monthly report and said it expected demand to expand by a further 1.4 million bpd next year.

4. The White House plans to release a brief document in early- to mid-September outlining a framework for overhauling the U.S. tax code, according to three sources familiar with the matter. Sources said the framework document would not be accompanied by legislation. But it could provide a starting point for a tax bill. It would lay out areas of agreement between the Trump administration, the Senate and the House of Representatives, and could also include input from discussions with Democrats.

5. Australia's central bank aims to keep interest rates at record lows for a while yet, governor Philip Lowe said on Friday, with any tightening "quite some time away" and likely to be gradual as households try to whittle down a mountain of debt. "It was a reasonable assumption that the next move in interest rates was up rather than down," Lowe said at the RBA's semi-annual testimony to parliament's economics committee in Melbourne. Futures market implies steady rates until early 2018 with a hike fully priced in only by next Christmas.

Domestic News
6. China's central bank said on Friday that it will keep the yuan currency basically stable, while maintaining a stable and neutral monetary policy. The People's Bank of China will also fend off systemic risks and use multiple monetary policy tools to ensure financial stability in the world's second largest economy, it said in its second-quarter monetary policy implementation report.

7. China should remain neutral if North Korea launches an attack that threatens the United States, a Chinese state-run newspaper said on Friday, sounding a warning for Pyongyang over its plans to fire missiles near the U.S. Pacific territory of Guam. "If the U.S. and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern of the Korean Peninsula, China will prevent them from doing so," the comments from the influential Global Times  said.

8. At least 36 people were killed and 13 others injured in an expressway accident in northwest China's Shaanxi Province on Thursday night. The accident occurred when a coach hit the wall of the Qinling tunnel of the Beijing-Kunming Expressway, Xinhua reported. The injured have been rushed to the hospital and rescue work is underway.

9. The 13th National Games will be held in Tianjin from August 27, two years after a massive explosion in the Binhai New Area. Tianjin plans to take advantage of this game and preferential policies to make it a leading "ne belt one road"port.

II. Market Overview
FX
1. Global Market
The dollar fell against a basket of currencies on Friday, after data showed U.S. consumer prices rose less than expected in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year. The dollar index, which tracks the greenback against six major currencies, was down 0.37 percent at 93.052, after earlier falling to a one-week low of 92.934. The dollar fell to a 16-week low against the Japanese yen , but pared some losses after Russian Foreign Minster Sergei Lavrov said there was a Russian-Chinese plan to defuse tensions between the United States and North Korea. The dollar was 0.11 percent lower against the Swiss franc . The euro was up 0.45 percent at $1.1823.

2. Home Market
China's yuan pulled back against the U.S. dollar in the morning session on Friday, with its guidance jumping almost 130 pips to a 10-1/2 month high. Some institutional investors considered that regulators do not want to see a sharply rising yuan. Offshore yuan CNH turned lowered as bargain hunting emerged. But its strength is expected to sustain in the medium term.

Precious Metals
Gold prices climbed to two-month highs on Friday, rising for the fourth straight day as investors sought refuge amid escalating tensions between North Korea and the United States, while bullion also received support from weak U.S. inflation data. Spot gold was up 0.2 percent at $1,287.91 an ounce, and set for its biggest weekly gain since mid-April. It earlier hit $1,291.86, its highest level since June 7. U.S. gold futures settled up 0.3 percent at $1,294.

Commodities
1.Crude Oil
Oil prices rose slightly on Friday in volatile trading as the market weighed lower U.S. crude stocks, Nigerian instability and strong global demand growth against a persistently slow rebalancing. Brent crude settled up 20 cents or 0.39 percent to $52.10 a barrel. U.S. West Texas Intermediate crude was up 23 cents or 0.47 percent to $48.82 a barrel. U.S. crude was down 1.5 percent on the week, while Brent was down 0.6 percent.

2.Base Metals
Nickel and other base metals slumped on Friday as investors shunned risky assets amid tensions on the Korean peninsula and secured profits after a recent rally. LME benchmark nickel was the biggest loser on the exchange, closing the day down 3 percent at $10,660 a tonne after gaining nearly a quarter over the past month, touching a four-month peak on Thursday. Three-month LME zinc shed 1.4 percent to finish at $2,896.50, but closed the week with a gain of 3 percent. LME copper slipped 0.2 percent to close at $6,411 amid indications that physical demand in China was faltering. LME aluminium bucked the weaker trend. It ticked 0.3 percent firmer to finish the day at $2,042, ending with a weekly gain of nearly 7 percent, the biggest weekly rise since September 2012.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields slipped on Friday as softer-than-expected inflation data for July further eroded expectations of an interest rate hike by the Federal Reserve at its December monetary policy meeting. In late trading, U.S. 10-year yields dropped to six-week lows of 2.182 percent after the data, compared with 2.211 percent late Thursday. Ten-year yields were last at 2.188 percent. U.S. 30-year bond yields also fell to a six-week trough of 2.769 percent. U.S. two-year yields sank to an eight-week low of 1.314 percent, down from Thursday's 1.335 percent. Two-year yields last traded at 1.294 percent.

2. Chinese bonds
Yields of China's interbank cash bonds kept falling in the morning session of Friday, with T-bond futures turning higher. Rising geopolitical tensions spurred safe-haven bets. Improving market sentiment and liquidity drew more investors in.

Stock Market
1. U.S. Equities
The three major U.S. stocks indexes ended higher on Friday, snapping three days of losses, as investors bet on slower U.S. rate hikes, but gains were muted by increasingly aggressive exchanges between the United States and North Korea. The Dow Jones Industrial Average rose 14.31 points, or 0.07 percent, to 21,858.32, the S&P 500 gained 3.11 points, or 0.13 percent, to 2,441.32 while the Nasdaq Composite added 39.68 points, or 0.64 percent, to 6,256.56. For the week the S&P fell 1.4 percent and the Dow lost 1.1 percent - their largest weekly drops since the week ending March 24 - and the Nasdaq was off 1.5 percent.

2. Hong Kong Equities
Hong Kong shares fell 2 percent on Friday, dragged down by a sell-off in internet-related shares and fears over the impact of rising tensions between the United States and North Korea. The Hang Seng index fell 2.0 percent, to 26,883.51, while the China Enterprises Index lost 1.9 percent, to 10,572.97 points. The losses on Friday brought the Hang Seng down 2.5 percent for the week, making for its worst weekly performance this year.

3. China Equities
Tracking global market, China's Shanghai Composite Index fell 1.6 percent to an over three-month low, extending losses to the third consecutive day, led by steel and non-ferrous metals. Deteriorated technical chart and profit-taking by some investors are expected to keep prices in check in the following sessions.