I. Yesterday’s News
International News

1. The Republican-controlled U.S. House of Representatives gave final approval on Wednesday to the biggest overhaul of the U.S. tax code in 30 years, sending a sweeping $1.5 trillion tax bill to President Donald Trump for his signature. The House approved the measure by 224-201, passing it for the second time in two days after a procedural foul-up forced another vote on Wednesday. The Republican-led Senate had passed it 51-48 in the early hours of Wednesday. It was uncertain when the bill would be signed. White House economic adviser Gary Cohn said the timing depended on whether automatic spending cuts triggered by the legislation could be waived. Trump could sign the bill as soon as Friday if the resolution was passed by then.

2. Business confidence among Asian companies rose in October-December to the highest in almost seven years due to robust consumption and global trade, a Thomson Reuters/INSEAD survey showed. The Thomson Reuters/INSEAD Asian Business Sentiment Index, representing the six-month outlook of 94 firms, rose to 78 for the December quarter from 69 three months before. The index reached its highest since January-March 2011. A reading above 50 indicates a positive outlook.

3. According to the Bank of Japan (BoJ) data released on Wednesday, the central bank’s holdings of government debt rose to a record in July-September under its quantitative easing programme. The BOJ held a record 445 trillion yen ($3.94 trillion) in government debt at the end of September, up 7.6 percent from the same period a year earlier.

4. The Bank of England, seeking to protect the City of London's status as a global financial hub, said it would spare European banks costly capital rules after Brexit but warned of "consequences" if negotiations with Brussels turned sour. Bank of England Governor Mark Carney said big European banks operating in Britain would face little change, as long as their supervisors in the European Union cooperated with London after Brexit. “But we retain all our options and if that is not forthcoming there will be consequences for those institutions,” he told lawmakers shortly after the BoE plan was published.

Domestic News

5. China’s gross domestic product will expand 6.8 percent in 2017 after growing 6.7 percent in 2016, achieving his growth target set earlier this year and remaining at middle to high growth range, the Chinese Academy of Social Sciences (CASS) said at a press briefing Wednesday. But the CASS ticked downwards the growth of the world's number two economy to 6.7 percent next year, saying China’s economy will remain resilient in new normalization, while no hard landing is expected due to steady employment and prices.

6. China will further its supply-side structural reform in the coming year with more efforts to improve economic quality, as high-quality development and forestalling risks will be the major theme of China's economic policies next year, according to decisions made at the Central Economic Work Conference, which concluded on Wednesday. China has decided to maintain an active fiscal policy, and prudent and neutral monetary policy in 2018, and made important deployment on people’s livelihood, environment protection and reform. Compared with last year’s statement of properly expanding social demand, the meeting paid more attention to pushing forward reform and opening-up, innovation and macro regulation, designating to create conditions for turn China into an economic big power by quality reform, efficiency reform, driving force reform.

7. China's insurance regulator issued draft rules to strengthen supervision of how insurers manage their assets and liabilities to manage assets and liabilities, based on cash flow and cost matching, the China Insurance Regulatory Commission (CIRC) said.

II. Market Overview
FX
1. Global Market

The dollar retreated against most currencies except the yen and Swiss franc on Wednesday, with the greenback seen having limited upside potential given that investors have already factored in a comprehensive U.S. tax bill that is all but certain to be signed into law by President Donald Trump. In late trading, the dollar index fell 0.1 percent to 93.309 . That led the euro to rise 0.3 percent versus the dollar to $1.1879. The dollar also fell against sterling and the Australian, Canadian and New Zealand dollars. Against the yen, however, the dollar rose to one-week highs and was last at 113.39 yen, up 0.5 percent.

2. Home Market

China's yuan firmed against the dollar to a three-week high in the morning session on Tuesday, in tandem with the official midpoint rates due to the lower dollar index. A firmer yuan pulled some dollar bulls out of market. Consolidation is expected in the near term.

Precious Metals

Gold prices rose on Wednesday for a fourth straight session to reach a two-week high as U.S. data showing solid home sales but a fall in mortgage applications pushed the dollar to a two-week low. Gains in bullion were limited, however, by a rise in U.S. bond yields to nine-month highs. Spot gold was up 0.37 percent at $1,265.59 an ounce, after rising to $1,267.81, the highest since Dec. 6. U.S. gold futures settled up 0.4 percent at $1,269.60.

Commodities
1.Crude Oil

Crude prices rose on Wednesday, supported by a larger-than-expected drop in U.S. inventories and the continued outage of the North Sea Forties pipeline system. West Texas Intermediate crude futures settled up 53 cents at $58.09 a barrel, while Brent crude ended up 76 cents at $64.56 a barrel.

2.Base Metals

Copper hit a two-month high on Wednesday as the dollar fell and investors remained upbeat about global growth prospects as a U.S. tax overhaul neared completion and China's economy remained on a firm footing. Three-month copper on the London Metal Exchange ended up 1.5 percent at $7,0454 a tonne, crossing the psychologically important $7,000 mark and hitting its highest since mid-October at $7,070.50. Aluminium closed up 1.1 percent at $2,122, its highest since late November. Nickel closed up 2.3 percent at $12,030 a tonne, having hit its highest since mid-November.

U.S. Treasuries
1. U.S. Bonds

U.S. Treasury yields rose to nine-month highs on Wednesday on optimism a U.S. tax overhaul will help boost growth and as economic data improves. Benchmark 10-year notes were down 8/32 in price to yield 2.480 percent, up from 2.463 percent on Monday. The yields earlier rose to 2.497 percent, the highest since March 21. The yield curve between two-year and 10-year notes also steepened as high as 63 basis points, a record since Nov. 30 as longer-dated notes underperformed on growth optimism and as some traders unwound positions that had been betting on further flattening.

2. Chinese bonds

Yields of cash bonds pulled back in China’s interbank market in the morning session of Wednesday, while the Treasury bonds also traded in weak momentum. Cash bonds extended the previous session’s upward momentum driven by higher U.S. Treasury bonds yields overnight. Cross-year fund prices remained high, weighing on market sentiment.

Stock Market
1. U.S. Equities

Wall Street's main indexes dipped on Wednesday, pausing after recent record highs as both houses of Congress approved a long-anticipated tax overhaul. Some analysts say the market has reached a lull, given stocks have already priced in approval of the tax bill. The Dow Jones Industrial Average fell 28.1 points, or 0.11 percent, to 24,726.65, the S&P 500 lost 2.22 points, or 0.08 percent, to 2,679.25 and the Nasdaq Composite dropped 2.89 points, or 0.04 percent, to 6,960.96.

2. Hong Kong Equities

Hong Kong stocks dipped slightly on Wednesday as weakness in financial and IT stocks offset strength in property and utility plays. At close of trade, the Hang Seng index was down 19.57 points or 0.07 percent at 29,234.09. The Hang Seng China Enterprises index fell 0.31 percent to 11,505.88.

3. China Equities

Chinese stocks settled lower on Wednesday, led by cyclical sector, as investors stay on the sidelines, awaiting policy clues from the the Central Economic Work Conference which concluded on Wednesday. Market was still seeking bottom to restore technical indicators. The Shanghai Composite Index closed down 8.93 points or 0.27 percent at 3,287.61. The trading volume of Shanghai A-shares rose to 167.9 billion yuan from 150.7 billion yuan.