I. Yesterday's News
International News
1. The Bank of England kept interest rates at a record low again on Thursday and cut its forecasts for growth and wages as it warned that Brexit was weighing on the economy. The BoE's rate-setters voted 6-2 to keep Bank Rate at 0.25 percent. The gloomier outlook for the next two years further reduced speculation that the BoE was close to its first rate hike in a decade. Governor Mark Carney nonetheless sought to keep alive the possibility of one next year. The pound hit a nine-month low against the euro and fell by more than a cent against the U.S. dollar. Shares rose and British government bond prices jumped.

2. A grand jury has issued subpoenas in connection with a June 2016 meeting that included President Donald Trump's son, his son-in-law and a Russian lawyer, two sources told Reuters on Thursday, signaling an investigation is gathering pace into suspected Russian meddling in the 2016 U.S. Election. U.S. stocks and the dollar weakened following the news, while U.S. Treasury securities gained.

3. The United States could shortly broaden talks on a push for stronger United Nations sanctions on North Korea to include all 15 Security Council members, signalling a likely deal with China on new measures, diplomats said on Thursday. Some diplomats said the United States could give the draft resolution to all 15 council members as early as Thursday.

4. Initial claims for state unemployment benefits decreased 5,000, while four-week average of claims falls to two-month low, pointing to a tightening labor market that likely keeps the Federal Reserve on course to announce plans next month to start reducing its massive bond portfolio. Labor market strength was also underscored by another report on Thursday showing U.S.-based employers last month announced the fewest job cuts in eight months. But a moderation in services sector activity to an 11-month low in July put a wrinkle in the brightening economic outlook. The dollar fell against the yen, euro and Swiss franc on Thursday after weaker-than-expected U.S. services sector data worried investors ahead of jobs data and stoked doubts that the Federal Reserve would raise interest rates again in 2017. U.S. stocks diverged.

5. China's central bank is considering a widening of the yuan's trading band after a major Communist party meeting this year, a largely cosmetic move that would burnish its reform credentials as official policy focuses on reducing debt. The People's Bank of China could widen the yuan trading range to allow it to rise or fall 3 percent against the dollar from the daily mid-point rate set by the central bank, up from the current 2 percent, according to four sources familiar with internal policy discussions. Curbs on capital outflows may stay despite yuan rebound.

6. Goldman Sachs has bought a slice of Saudi Aramco's $10 billion credit facility as it seeks a role in the historic listing of the oil company, sources familiar with the matter told Reuters. Two of the sources said Goldman purchased several million dollars in the secondary market from Australia and New Zealand Banking Group.

Domestic News
7. Three top Democratic senators, in a rare show of bipartisanship, on Wednesday urged U.S. President Donald Trump to stand up to China as he prepares to launch an inquiry into Beijing's intellectual property and trade practices in coming days. Senate Democratic leader Chuck Schumer pressed the Republican president to skip the investigation and go straight to trade action against China. A spokesman for China's Ministry of Commerce told reporters in Beijing on Thursday that China puts a strong emphasis on intellectual property rights and that all WTO members should respect the rules of the organization. "The 100-day action plan for economic cooperation between China and the US has made significant progress in the past three months. We hope the positive momentum of cooperation can continue", said commerce ministry spokesman Gao Feng.

8. The National Development and Reform Commission fined the Shanxi Province Electric Power Association and 23 thermal power plants 73.38 million yuan for monopolistic pricing, settling China's first antitrust case on power supply, the top economic planner said yesterday.

9. The Caixin/Markit services purchasing managers' index (PMI) dropped to 51.5 in July. While the drop was marginal, the reading matched the level in April which was the lowest since May 2016. The rate of new business growth eased to a 16-month low, suggesting dimmer outlook on service sector. But an uptick in manufacturing contributed to an accelerated expansion of Caixin's composite PMI.

10. China's tribunals need to improved the quality of bankruptcy hearings and to efficiently clean up zombie companies as disputes involving ‘zombie companies' play a bigger role in providing a fair and effective environment for the market-oriented economy, said He Xiaorong, chief judge of the top court's No 2 Civil Tribunal. The legal rights of creditors and borrowers shall also be protected, he added.

11. China's Guangzhou tightens home price controls, issuing notice to reinforce regulation on home prices, saying new property developments in the city that do not follow price guidance from the government will not be issued presales permits.

II. Market Overview
FX
1. Global Market
The dollar fell against the yen, euro and Swiss franc on Thursday after weaker-than-expected U.S. services sector data worried investors ahead of jobs data and stoked doubts that the Federal Reserve would raise interest rates again in 2017. The dollar's losses against the yen reached 0.7 percent on the day after the data, with the greenback touching a session low of 109.96 yen. That was still above the than six-week low of 109.91 yen hit on Tuesday. The euro rose modestly against the dollar and hit a session high of $1.1892, just below Wednesday's more than 2-1/2-year high of $1.1909.
Sterling slumped as much as 0.8 percent against the dollar to $1.3113 after the Bank of England kept interest rates at a record low on Thursday. That helped limit losses in the dollar index, which measures the greenback against six major rivals including sterling. The index was almost flat at 92.844, holding above a 15-month low touched on Wednesday of 92.548.

2. Home Market
China's yuan pulled back against the dollar along with the midpoint rates on Thursday, after the dollar index steadied. Yuan dipped to around 6.73 during one point after the exit of dollar bears, but forex settlement filled in the gap. China's currency is expected to move in tandem with the greenback. But a sustained decline is unlikely due to altered market expectations.

Precious Metals
Gold steadied on Thursday, hovering below Tuesday's seven-week high, as investors awaited U.S. jobs data for further clues on the outlook for interest rates. Spot gold closed at $1,268.15 an ounce, not far from Tuesday's seven-week high of $1,273.97. In early Asian trade, it fell $6.20 within one minute to the session low of $1,258.20 but quickly recovered. U.S. gold futures for December delivery settled down 0.3 percent at $1,274.40.

Commodities
1.Crude Oil
Oil prices fell on Thursday, as cautious buying dried up after U.S. crude rose to near $50 a barrel, with concern about high crude supplies from producer club OPEC offsetting the previous day's data showing record U.S. gasoline demand. Benchmark Brent crude settled down 35 cents a barrel at $52.01 a barrel. U.S. light crude was 56 cents lower at $49.03. U.S. crude traded at a session high of $49.96 a barrel.

2.Base Metals
Copper held near two-year highs on Thursday and nickel rose for a 10th straight session, supported by expectations of stronger demand from top consumer China and a weak dollar though gains were limited by profit-taking. Benchmark copper on the London Metal Exchange ended unchanged at 6,352 a tonne, close to Monday's two-year high of $6,430 and up 14 percent since early June. LME nickel closed up 0.3 percent at $10,380 a tonne after touching a four-month high of $10,445 earlier in the session.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields fell to more than one-week lows on Thursday after the Bank of England kept interest rates at a record low and downgraded its economic and inflation forecasts, raising concerns about global economic growth. U.S. benchmark 10-year Treasury notes gained 7/32 in price to yield 2.24 percent, down from 2.262 percent late on Wednesday. The yield curve between five-year notes and 30-year bonds flattened to 101 basis points, the lowest since July 25.

2. Chinese bonds
China's repo rates edged lower as inter-bank liquidity further improved. Market supply increased on loosing liquidity at beginning of month and easing sentiment among institutional investors, although the central bank turned to net drainage.

Stock Market
1. U.S. Equities
The S&P 500 and the Nasdaq fell on Thursday, weighed down by Amazon.com, Apple and other top-shelf technology stocks, while the Dow Jones Industrial Average edged up to a seventh straight record high. Stocks lost a little ground late in the session after the Wall Street Journal reported that Special Counsel Robert Mueller has impaneled a grand jury in Washington to investigate allegations of Russia's interference in the 2016 U.S. presidential election. The Dow Jones Industrial Average edged up 0.04 percent, or 9.86 points, to end at 22,026.1, an all-time high. The S&P 500 lost 5.41 points or 0.22 percent to 2,472.16 and the Nasdaq Composite dropped 22.30 points or 0.35 percent to 6,340.34.

2. Hong Kong Equities
Hong Kong stocks followed other Asian markets lower on Thursday, as investors paused for breath after recent strong gains in financial and resources firms. The Hang Seng index fell 0.3 percent, to 27,531.01 points, while the China Enterprises Index lost 0.5 percent, to 11,002.20 points.

3. China Equities
China's Shanghai Composite Index extended losses led by financials. The decline picked up late in the session after a short-lived uptick at opening. Profit-taking is expected to prevail as some shares posted sharp gains in the past two months.