I. Yesterday’s News
International News

1. U.S. job growth slowed more than expected in December amid a decline in retail employment, but a pick-up in monthly wage gains pointed to labor market strength that could pave the way for the Federal Reserve to increase interest rates in March. Nonfarm payrolls rose by 148,000 last month after a surge of 252,000 in November, the Labor Department said on Friday. The unemployment rate was unchanged at a 17-year low of 4.1 percent. Economists polled by Reuters had forecast payrolls rising by 190,000 in December. Taking the sting out of the moderation in job gains, average hourly earnings rose 9 cents, or 0.3 percent, in December after a 0.1 percent gain in the prior month. That lifted the annual increase in wages to 2.5 percent, from 2.4 percent in November.

2. The U.S. "economic expansion is firmly in place, labor markets are strong, and I expect that inflation, which has been running under our goal for quite some time, will return to our 2 percent goal on a sustained basis over time," said Cleveland Fed President Loretta Mester. Philadelphia Federal Reserve President Patrick Harker said it’s appropriate for the central bank to raise interest rates two times in 2018.

3. OPEC deepened compliance with an oil supply-cutting deal in December due to a further decline in Venezuelan output and extra cuts by Gulf exporters, a Reuters survey found, showing strong commitment to the deal despite higher prices. Adherence to the curbs rose to 128 percent, the survey found.

4. North Korea agreed on Friday to hold official talks with South Korea next week, the first in more than two years, hours after Washington and Seoul delayed a military exercise. South Korea said North Korea had sent its consent for the talks to be held next Tuesday. The last time the two Koreas engaged in official talks was in December 2015.

Domestic News

5. China's banking regulator published on Friday new draft rules seeking to limit commercial banks' large exposures, marking the latest regulatory step to contain leverage risks in the financial system.
In a statement, the China Banking Regulatory Commission said commercial banks' exposure to the interbank market cannot exceed 25 percent of their tier-1 capital with a three-year grace period.

6. The National Bureau of Statistics revised the final 2016 GDP to 74.3585 trillion yuan, down 54.2 billion yuan from the preliminary number. The 2016 growth rate of the world's second-biggest economy remains unchanged at 6.7 percent, the statistics bureau said in a statement.

II. Market Overview
FX
1. Global Market

The dollar gained on Friday after a brief dip as investors reckoned a weaker-than-expected U.S. December non-farm payrolls report would not deter the Federal Reserve from raising interest rates multiple times this year. In late trading, the dollar gained 0.3 percent against the yen to 113.14, while the euro fell 0.2 percent versus the dollar to $1.2042. That put the dollar index, a measure of the greenback's value against six major currencies, up 0.1 percent on the day.

2. Home Market

The Chinese currency, the yuan, was firmer against the U.S. dollar on Friday, approaching 6.48 per dollar, the highest in four months, after crossing over the key mark of $6.49. While the official midpoint rates hit a 20-month high once again. Market sentiment for yuan soared as the dollar index weakened overnight under the strength of euro. Onshore yuan firmed following offshore yuan that breached 6.48 per dollar.

Precious Metals

Gold dipped in choppy trading on Friday as traders cashed in gains from the metal's rally to 3-1/2-month highs this week and as the dollar rose even after weaker-than-expected U.S. payrolls data for December. Spot gold was down 0.2 percent at $1,319.70 an ounce 1845 GMT, off Thursday's high of $1,325.86. It was still up 1.3 percent from last week's close. U.S. gold futures for February delivery settled up 70 cents, or 0.05 percent, at $1,322.30 per ounce.

Commodities
1.Crude Oil

Oil prices fell on Friday, dropping from highs last seen in 2015, as soaring U.S. production undermined a 10 percent rally from December lows that was driven by tightening supply and political tensions in OPEC member Iran. West Texas Intermediate crude futures fell 57 cents to settle at $61.44 a barrel. Brent crude futures for March delivery fell 45 cents, or 0.7 percent, to $67.62 a barrel.

2.Base Metals

Zinc hit its highest in more than a decade on Friday as concerns over market tightness persisted, while copper hit a two-week low as Chinese investor interest was muted with the Lunar New Year holidays looming. Three-month zinc on the London Metal Exchange ended down 0.2 percent at $3,354 a tonne, having hit its highest since August 2007 at $3,375. Copper ended down 1 percent at $7,120 a tonne.

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

U.S. Treasury yields rose on Friday with the two-year yield hovering near a more than nine-year peak as investors stuck to the view of a possible rate increase in March, brushing off a disappointing figure on domestic hiring for December. At 1952 GMT, the benchmark 10-year Treasury yield was up 2 basis point at 2.474 percent, within striking distance of the nine-month peak of 2.504 percent set on Dec. 21. The two-year yield edged up 0.4 basis point to 1.960 percent. On Thursday, it reached 1.976 percent which was the highest since October 2008.

2. Chinese bonds

Yields of short-dated cash bonds kept falling in China’s interbank market, while longer-dated bonds remained unchanged. Treasury bond futures were traded in a tight range after opening slightly higher. Loose liquidity continued to push down yields of short-dated bonds, while longer-dated bonds swung slightly on concerns over regulation and fundamentals. CDB’s 10-year active bonds recovered slightly, but remained under highs touched in the morning session.

Stock Market
1. U.S. Equities

The S&P 500 and Nasdaq notched their best weekly gains in more than a year on Friday as technology stocks helped lift major indexes to records. The Dow Jones Industrial Average rose 220.74 points, or 0.88 percent, to 25,295.87, the S&P 500 gained 19.16 points, or 0.70 percent, to 2,743.15 and the Nasdaq Composite added 58.64 points, or 0.83 percent, to 7,136.56.

2. Hong Kong Equities

Hong Kong stocks rose for a ninth straight session on Friday, aided by strong gains by real estate firms, and the benchmark Hang Seng Index closed at a 10-year high. At close of trade, the Hang Seng index was up 78.16 points or 0.25 percent at 30,814.64. The Hang Seng China Enterprises index rose 0.07 percent to 12,211.63. For the week, HSI was up 3.0 percent, its fourth straight such gain.

3. China Equities

Chinese stocks remained at a 1-1/2-month high on Friday, extending its winning streak to the sixth consecutive day. After recent gains, major indexes were consolidating during the session with heavyweights ourperforming middle and small caps. Recent winners were corrected across the board, but property and bank names remained strong. Major indexes are expected to pull back before regaining steam. The benchmark Shanghai Composite Index closed up 6.04 points or 0.18 percent at 3,391.75, drawing near to the previous high of 3,430.46 hit on November 22, 2017. The index was up 2.56 percent this week, the largest advance in 1-1/2 years. The trading volume of Shanghai A-shares rose to 248 billion yuan from 242.9 billion yuan.