I. Yesterday's News
International News
1. The U.S. economy will be strong enough for the Federal Reserve to trim its bond holdings "this fall," San Francisco Fed President John Williams said on Wednesday, in a sign the central bank was close to unwinding a controversial stimulus tool. "My own view is that it will be appropriate to start this process this fall," Williams said, adding that it still “makes sense” for the central bank to further raise rates this year, and have three more the next year.
The Federal Reserve should remain focused on gradually tightening U.S. policy because one-off factors, not a long-lasting trend, have caused inflation to weaken in recent months, Cleveland Fed President Loretta Mester said. Mester backed the central bank's telegraphing of roughly three rate hikes per year.
St. Louis Federal Reserve James Bullard is opposed to further U.S. interest rate increases by the central bank and warned that more hikes could hinder domestic inflation from achieving the Fed's 2-percent goal, Market News International reported on Wednesday. His remarks raised doubts about another Federal Reserve interest rate increase this year.
The CME Group fed funds futures indicated there is a 46 percent chance of one rate hike in December.

2. U.S. President Donald Trump grudgingly signed into law new sanctions against Russia on Wednesday, a move Moscow said amounted to a full-scale trade war and an end to hopes for better ties with the Trump administration. Congress overwhelmingly approved the legislation last week, passing a measure that conflicts with the Republican president's desire to improve relations with Moscow. Russian Prime Minister Dmitry Medvedev called the sanctions tantamount to a "full-scale trade war," adding in a Facebook post that they showed the Trump administration had demonstrated "utter powerlessness."

3. The U.S. Treasury said on Wednesday it will keep coupon auctions steady in the third quarter and could increase issuance of bills and a broader set of coupons later in the year to make up for a future decline in Federal Reserve bond purchases. A decision by Treasury could come at the next refunding announcement in November and likely no later than the end of the first quarter in 2018. After the announcement, thirty-year Treasury bonds steadied at 2.88 percent, rebounding from 2.86 percent.

4. Eurostat said industrial producer prices in the 19-country currency bloc increased 2.5 percent on the year in June, slowing from an upwardly revised 3.4 percent rise in May and a 4.3 percent surge in April. The June figure was the lowest this year in a further sign that inflationary pressures are easing, complicating European Central Bank's plans to begin a gradual tightening of its monetary policy in autumn.

5. The Reserve Bank of India cut its main policy rate on Wednesday by a quarter percentage point to a more than 6-1/2 year low, saying a slump in inflation opened room for monetary easing, and that it would monitor economic data to determine further action. The rate cut is the RBI's first easing move since one of the same size in October and the first by a central bank in Asia since December.

Domestic News
6. U.S. President Donald Trump is close to a decision on how to respond to what he considers China's unfair trade practices, a senior Trump administration official said on Tuesday.

7. China's Ministry of Finance said provincial areas would be encouraged to issue special government bonds to finance public projects that can generate stable incomes. This move is interpreted as creating China's version of “Municipal Bonds” to prevent debt risks of local governments.

8. China has revised a regulation on environmental protection of construction projects, streamlining administrative supervision and requiring strict evaluation on environmental impact in accordance with laws, according to a State Council decree. No construction is allowed ahead of the approval of environmental impact evaluation documents.

9. China has stepped up financial management of overseas investments made by state-owned enterprises (SOEs), requiring SOEs to specify rules on feasibility and financial due diligence, making sure projects are financially viable before decisions are made, the Ministry of Finance said Wednesday. SOEs should also establish mechanisms to evaluate overseas investments performance, and base future asset allocations on such evaluations.

10. At least two of HNA Group's overseas deals have hit a hurdle as the Chinese conglomerate struggles to take money out of China, said four people familiar with the process, amid a widening crackdown by Beijing on debt-fueled corporate acquisitions.

II. Market Overview
FX
1. Global Market
The U.S. dollar hit its lowest level against the euro in more than 2-1/2 years on Wednesday on doubts about another Federal Reserve interest rate increase this year and expectations for European Central Bank hawkishness. The euro hit $1.1909, its highest level against the dollar since January 2015. The dollar index, which measures the greenback against a basket of six major rivals, touched a 15-month low of 92.548 and was last down 0.2 percent at 92.833. The dollar gained slightly against the yen and was last at 110.59 yen. The dollar was last up 0.2 percent against the Canadian dollar at C$1.2557 after touching a 1-1/2-week high of C$1.2591. The New Zealand dollar touched a one-week low against the greenback of $0.7411.

2. Home Market
China's yuan pulled back from its strongest in nine-and-a-half months on Wednesday, after the central bank lowered its official guidance following a modest bounce in the dollar. Yuan's prices also fell. Investors shall closely watch the impact on yuan by escalating trade spat between China and the United States.

Precious Metals
Gold rose on Wednesday, nearing seven-week highs as the dollar fell to a 15-month low and U.S. data showed fewer-than-expected new jobs in July, bringing into question chances of the Federal Reserve raising interest rates in the coming months. Spot gold was up at $1,266.20 an ounce. U.S. gold futures settled down 0.08 percent at $1,278.40.

Commodities
1.Crude Oil
Oil prices edged higher on Wednesday, as surging U.S. fuel demand and strong refinery runs offset data from the Energy Department that showed crude inventories did not fall as much as expected last week. Brent crude futures ended the session up 1.1 percent, or 58 cents, at $52.36 a barrel after hitting a session low of $51.18. U.S. West Texas Intermediate crude rose 0.9 percent to settle at $49.59 a barrel, after falling to a low of $48.55 earlier in the session.

2.Base Metals
Aluminium prices rose on Wednesday on buying from investors expecting capacity cuts in top producer China, but analysts say supplies may not fall significantly as any cuts could be offset by new capacity. Benchmark aluminium on the London Metal Exchange ended up one percent at $1,926 a tonne. Copper ended up 0.1 percent at $6,352.

U.S. Treasuries
1. U.S. Bonds
Long-dated debt yields fell on Wednesday, and the yield curve flattened to its lowest levels in a week, after the U.S. Treasury Department said it was still considering an ultra long bond, but didn't announce a new issue. Thirty-year Treasury bonds gained 2/32 in price to yield 2.85 percent, down from 2.88 percent before the announcement. The yield curve between five-year notes and 30-year bonds flattened to 103 basis points, the lowest level since July 26.

2. Chinese bonds
China's cash bond yields fell slightly in the morning session on Wednesday, while Treasury bond futures edged up. Market sentiment on cash bonds improved as liquidity eased. The auction of new T-bonds were well-received.

Stock Market
1. U.S. Equities
The Dow climbed above the 22,000 mark for the first time on Wednesday, buoyed by Apple's healthy quarterly iPhone sales, while weakness in other tech stocks held back the Nasdaq and S&P 500. Apple jumped 4.73 percent to a record high after the world's largest publicly listed company reported strong results. It is up 36 percent this year. The Dow Jones Industrial Average rose 52.32 points or 0.24 percent to end at 22,016.24, a record high. The S&P 500 gained 1.22 points or 0.05 percent to 2,477.57 and the Nasdaq Composite fell 0.29 points at 6,362.65.

2. Hong Kong Equities
Hong Kong shares rose for a third straight session on Wednesday, as investors continued to chase mainland financials and materials firms. The Hang Seng index finished 0.2 percent higher at 27,607.38 points, while the China Enterprises Index gained 0.3 percent to 11,055.42 points. Most sectors advanced, led by materials and industrial firms.

3. China Equities
China's Shanghai Composite Index edged down, snapping a five-day gain, after crossing over the key mark of 3,300 to a 19-month high. But market divergence weighed on the index. Financial and cyclical names kept lifting the market on reinforced expectations on supply-side reform. But most individual stocks closed in the negative territory.