I. Yesterday's News
International News
1. Fed banks unanimous in keeping discount rate unchanged in July. All of the Federal Reserve's 12 regional banks wanted to hold steady the rate commercial banks are charged for emergency loans ahead of the U.S central bank's last policy meeting, minutes from a discussion of the discount rate showed on Tuesday. The U.S. central bank subsequently held its benchmark lending rate steady at its July 25-26 meeting and kept the discount rate unchanged at 1-3/4 percent. In wanting to keep the discount rate unchanged, directors of the regional banks cited recent soft readings on inflation. They wanted to wait "to assess whether incoming data support the current outlook for continued moderate economic growth, some further strengthening in labor market conditions, and a gradual return of inflation to 2 percent over the medium term," the minutes showed.

2. German Finance Minister Wolfgang Schaeuble is working on a proposal that would allow southern euro zone countries to tap into the single currency bloc's bailout fund to boost investments during recessions, a newspaper said on Wednesday. If the unsourced report in the mass-selling German daily Bild is confirmed, the plan would mark a major change of policy for Schaeuble who had until recently always opposed transfers from richer euro zone countries to poorer members like Greece. The Finance Ministry was not immediately available to comment on the report. Bild said Schaeuble intended to make the proposal after Germany's Sept.24 election. In exchange for more flexible access to the ESM, Schaeuble wants the fund to have more say over national debt and budgets.

3. Britain unexpectedly posted its first budget surplus for any July since 2002, boosted by strong income tax payments, according to official data on Tuesday. The surplus in July stood at 184 million pounds, compared with last year's 308 million pound deficit, the Office for National Statistics said, citing figures that exclude state-controlled banks. The figures were boosted by a 10.6 percent year-on-year rise in self-assessed income tax receipts in July, a month that often sees a spike in these returns.

4. Italy, France and Germany have asked the European Commission to reinforce existing regulations that allow EU states to block foreign acquisitions of European companies, two Italian dailies reported on Tuesday. The request cited the 'golden powers' to bar or set conditions for would-be buyers "that operate with rules that do not follow the market and that do not respect rules of reciprocity for acquisitions," Il Sole 24 Ore and La Stampa reported, citing a leaked letter.

5. Japan's Ministry of Finance is set to seek 23.8 trillion yen ($217.8 billion) in fiscal 2018 to finance the cost of debt-servicing, with the help of rock-bottom interest rates as a result of the central bank's monetary easing, government sources told Reuters. The budget request for debt-servicing compared with 24.6 trillion yen the MOF had requested last year for this fiscal year. The MOF will assume the borrowing rate as measured by the 10-year government bond yield at 1.2 percent. That compared with the interest rate of 1.6 percent the MOF had assumed last year when requesting its budget for this fiscal year.

Domestic News
6. To promote the development of inclusive finance while guarding against financing risks, the State Council issued a circular to tighten supervision over financing guarantee companies. According to the circular, outstanding liabilities guaranteed by a company should not exceed 10 times of its net assets, while the limit for small and micro businesses and the rural sector is lifted to 15 times.

7. China's economy remains on track for moderate growth under the new normal, said Wang Yiming, Vice President of the Development Research Center of the State Council, adding that China need to pay more attention to prevent financial risks to keep a steady environment for macro economy.

8. Growth in new home prices slowed in Beijing and other tier-1 cities is more likely to slow down, instead of sharply rebounding, while home prices in other key tier-2 and 3 cities will achieve soft landing. Regulation will continue, with a preliminary long-term mechanism setting up tot keep home prices in check.

9. Chinese automaker Great Wall Motor Co Ltd reiterated its interest in Fiat Chrysler Automobiles NV on Tuesday. It confirmed it had studied Fiat Chrysler, but said there was "no concrete progress so far" and "substantial uncertainty" over whether it would eventually bid. "The company has not built any relationship with the directors of FCA nor has the company entered into any discussion or signed any agreements with any officer of FCA so far," the company said. Fiat Chrysler stock dipped over 2 percent on the statement on Tuesday. Great Wall said trading in its Shanghai-listed shares would resume on Wednesday after having been suspended.

II. Market Overview
FX
1. Global Market
The dollar rallied on Tuesday after falling for two straight days, benefiting from the euro's decline following weaker-than-expected euro zone data as well as investors adjusting positions ahead of a global central bankers' conference this week. The U.S. currency posted its largest daily percentage gain in more than two weeks against the euro, and its best one-day rise in one week versus the yen. In late trading, the dollar index rose 0.5 percent against six major currencies to 93.549. The euro, meanwhile, slid 0.5 percent to $1.1749.

2. Home Market
China's yuan fell against the U.S. dollar late on Tuesday, while the midpoints hitting a 11-month high. The bearish dollar index pushed up the central bank's guidance rates, pushing the dollar bulls to stop losses and boosting yuan's prices. But the yuan turned to losses in the afternoon session as the non-dollar currencies rebounded.

Precious Metals
Gold prices fell on Tuesday, pressured by the stronger U.S. dollar ahead of an annual meeting of central bankers this week, while palladium fell from its highest level since February 2001. Investors awaited speeches by European Central Bank President Mario Draghi and U.S. Federal Reserve Chair Janet Yellen on Friday at Jackson Hole, Wyoming, for clues to the direction of interest and currency rates. Spot gold was down 0.5 percent at $1,284.33 an ounce. U.S. gold futures settled down 0.4 percent at $1,291.

Commodities
1.Crude Oil
Oil inched up on Tuesday, lifted by expectations of another crude stockpile drawdown in the United States but price gains were limited amid the reopening of Libya's largest oil field. Brent crude settled 21 cents, or 0.4 percent, higher at $51.87 a barrel. U.S. crude futures for September delivery closed 27 cents, or 0.6 percent, higher at $47.64 while the more active October contract ended the session up 30 cents at $47.83.

2.Base Metals
Copper retreated from a three-year high on Tuesday, and other base metals also fell or trimmed gains, as speculators and funds locked in some profits after a steep rally. Earlier in the session, metals were on the rise against a backdrop of strong results for mining firms and talk of shortages in some metals, but analysts said there was nothing new to justify the rich prices. Benchmark copper on the London Metal Exchange closed down 0.1 percent at $6,580 per tonne. LME three-month nickel ended up 0.9 percent at $11,415 a tonne after touching $11,555, the strongest since December.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields rose on Tuesday as investors awaited speeches by top central bankers later in the week for signals about monetary policy, and in the absence of major economic data. Stronger stock markets on Tuesday also reduced safety buying of U.S. debt. Benchmark 10-year notes were last down 10/32 in price to yield 2.22 percent, up from 2.18 percent on Monday.

2. Chinese bonds
Yields of China's inter-bank cash bonds kept rising in the morning session on Tuesday, while T-bond futures fell. Net capital withdrawal by by the central bank tightened liquidity in the open market, keeping market sentiment weak. Demand for new debt issued by the CDB was low.

Stock Market
1. U.S. Equities
U.S. stocks ended up on Tuesday, with each of the three major indexes posting their best one-day percentage gains in over a week, as lawmakers' comments on tax reform and the debt ceiling boosted investor optimism. The Dow Jones Industrial Average rose 196.14 points, or 0.9 percent, to 21,899.89, the S&P 500 gained 24.14 points, or 0.99 percent, to 2,453.10 and the Nasdaq Composite added 84.35 points, or 1.36 percent, to 6,297.48.

2. Hong Kong Equities
Hong Kong stocks ended higher for a second straight day on Tuesday, supported by upbeat earnings at some Chinese developers and modest gains on Wall Street. The Hang Seng index rose 0.9 percent, to 27,401.67 points, while the China Enterprises Index gained 1.9 percent, to 10,954.92 points.

3. China Equities
The Shanghai Composite Index extended gains for the fourth consecutive day on Tuesday, supported by resilient insurance and banking names. Most individual stocks fell, making it hard to breach previous highs. Market is expected to remain rangebound in the near term.