I. Yesterday's News
International News
1. The U.S. dollar recovered slightly on Friday, as some traders likely took profits on gains in the euro as well as the sterling. Hawkish signals from foreign central banks this week pressured the greenback further. U.S. Treasury yields rose on Friday as inflation data was not seen as weak enough to delay the Federal Reserve's expected path on interest rate hikes. Major U.S. stock indexes ended a volatile week, and the S&P 500 scored its biggest gain for the first half of the year since 2013. Investors turned their focus on the Federal Reserve's June policy meeting minutes due on Wednesday and U.S. Payroll report due on Friday.

2. U.S. consumer spending rose modestly in May and inflation cooled, pointing to a slow-but-steady economic expansion that could still lead the Federal Reserve to raise interest rates by the end of the year. Consumer spending rose 0.1 percent last month, according to the Commerce Department. Consumer prices excluding food and energy rose 1.4 percent on a yearly basis, compared to a 1.5 percent gain in April.

3. Canadian companies are more optimistic about future sales and exports, while improving demand is driving capacity pressures that should boost investment and hiring, the Bank of Canada said in a report on Friday that increased expectations for a rate hike. Overall, the survey suggested a continued recovery in business sentiment, and it fed into expectations that the Bank of Canada will begin raising interest rates, possibly as early as next month.

4. The European Central Bank should already be making preparations for winding down stimulus, adapting its communication stance accordingly, ECB board member Sabine Lautenschlaeger said on Friday. “Although inflation is not yet on a stable path towards our objective, all the conditions are in place,” said Lautenschlaeger, a German considered one of the top hawks on the governing council. “It is just a question of time and patience. “

5. Analysts have cut their forecasts for oil prices this year and next as the prospect of a continued large rise in U.S. production will likely slow OPEC's efforts to cut its output to help supply match demand, according to a Reuters poll. The survey of 36 economists and analysts predicted Brent crude would average $53.96 per barrel in 2017, down from the $55.57 per barrel forecast in the previous poll, continuing the trend of gradually lower forecasts each month this year. U.S. light crude was expected to average $51.92 a barrel this year, dipping from last month's forecast of $53.52. Analysts have cut their forecasts for 2017 every month since February this year.

Domestic News
6. China's Premier Li Keqiang said its investment growth, especially private investment, slowed this year, that would weigh on economic growth; while negative growth in real foreign investment should draw highly attention, saying its government need to break all the obstacles to boost investment and investors' confidence at home and abroad.

7.Audit in recent years shows that overall risk of China's government debt is under control, and the good momentum of steady economic growth is maintained, China's Ministry of Finance and National Audit Office.

8. China's National Development and Reform Commission (NDRC) said in a notice that its main cost-cutting target this year is to further cut tax and charges, including “five social insurance and one housing fund”; reduce systematic trade cost and financing cost to buoy support from financial sector to the real economy. It also said that it will deepen multi-layer reform in capital market to expand direct financing. 

9. Beijing called for coal miners to boost output and oil majors to maintain fuel operating rates as part of a series of steps to ensure power supplies over the summer, the National Development and Reform Commission (NDRC) also said in a statement.

10. China Insurance Regulatory Commission said in a notice that it will identify related parties and related transactions in line with the principle of “substance over formality” to trace back to the actual equity owner of financial products and assets of related parties.

II. Market Overview
FX
1. Global Market
The U.S. dollar recovered slightly on Friday, but posted its biggest quarterly decline against a basket of rival currencies in nearly seven years after hawkish signals from foreign central banks this week pressured the greenback further. Investors have ramped-up expectations for tighter monetary policy from the European Central Bank, Bank of England and Bank of Canada after hints from officials this week. This has made the greenback less attractive. The dollar index was last up 0.1 percent at 95.704, while the euro was down 0.2 percent against the dollar at $1.1416. The U.S. dollar index declined about 4.6 percent for the second quarter to mark its steepest quarterly percentage drop since the third quarter of 2010. The euro accelerated more than 7 percent against the greenback for its biggest quarterly percentage gain since the third quarter of 2010. The dollar gained about 1 percent against the Japanese yen over the quarter.

2. Home Market
China's yuan kept rising against the dollar on Friday, hitting a 7-1/2-high along with the midpoint rates. Yuan surged this week amid high season for forex buying, as the dollar index weakened, the midpoint rates extended gains and big banks kept settle forex. The 20th anniversary of Hong Kong's return to China also lifted market morale.

Precious Metals
Gold eased on Friday to stay on track for its first monthly loss this year, as hints from leading central banks that the era of easy money may be coming to a close pushed bond yields higher, hurting the non-interest bearing metal. Spot gold was down 0.3 percent at $1,241.41 an ounce, while U.S. gold futures for August delivery settled down 0.3 percent at $1,242.30. Spot gold fell around 2 percent sine June, recording a 0.6 percent decline in the second quarter, while gold rallied almost 8 percent in the first half of 2017.

Commodities
1.Crude Oil
Oil climbed on Friday for a seventh straight session as a decrease in the U.S. rig count and stronger demand data from China lifted depressed prices that still finished the first half with the biggest decline for that period since 1998. U.S. crude futures settled up $1.11, or around 2.5 percent, to $46.04 a barrel. Benchmark Brent crude futures settled up 50 cents at $47.92 a barrel. Both benchmarks ended the first half of 2017 with drops of more than 14 percent since Dec. 30, 2016, the largest drop since Brent and U.S. crude fell about 19 percent in the first half of 1998.

2.Base Metals
Copper retreated from a three-month high on Friday, pressured by a firmer dollar and a rise in inventories, offsetting better than expected factory growth in top metals consumer China. London Metal Exchange benchmark copper closed 0.1 percent down at $5,936 a tonne, retreating from an intraday peak of $5,965, the highest since March 30. Copper gained for the fourth consecutive quarter, advancing 7 percent in the first half.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury yields rose on Friday as inflation data was not seen as weak enough to delay the Federal Reserve's expected path on interest rate hikes, and as investors worried about less accommodative central banks in Europe. Benchmark 10-year notes fell 7/32 in price to yield 2.29 percent, after reaching an more than six-week high of 2.30 percent overnight, up from 2.27 percent late on Thursday.

2. Chinese bonds
Liquidity in China's interbank bond market turned tight balance as the central bank suspend repo buying. Onshore cash bonds continued to weaken on surprising PMI report in June and higher U.S. Treasury bond yields. The yield of 10-year CDB bonds rose around 2 bps, while IRS edged up as well.

Stock Market
1. U.S. Equities
Major U.S. stock indexes ended a volatile week on a modestly high note on Friday, led by a surge in Nike shares, and the S&P 500 scored its biggest gain for the first half of the year since 2013 while the Nasdaq Composite's first-half gain was its best since 2013. The Dow Jones Industrial Average rose 62.6 points, or 0.29 percent, to 21,349.63, the S&P 500 gained 3.71 points, or 0.15 percent, to 2,423.41, and the Nasdaq Composite dropped 3.93 points, or 0.06 percent, to 6,140.42. The S&P 500's percentage gain in the first half was its biggest since climbing 12.6 percent in the first six months of 2013. The Nasdaq posted its biggest first-half gain since 2009.

2. Hong Kong Equities
Hong Kong shares closed down on Friday, tracking weak overseas markets, but recorded their sixth straight monthly gain on expectations of supportive measures from Beijing at the 20th anniversary of Hong Kong's handover to China on July 1. The Hang Seng index fell 0.8 percent to 25,764.58, while the China Enterprises Index lost 0.6 percent to 10,365.22 points. For the month, Hang Seng rose 0.4 percent, its sixth straight month of gains. HSCE fell 2.2 percent in June.

3. China Equities
China's main stocks indexes closed slightly higher in volatile on Friday, extending gains to the second consecutive day led by heavyweights in the afternoon session. The market is expected to remain rangebound with trading volume gradually recovering as liquidity eased next week. Upbeat economic data would lift market morale. The Shanghai Composite Index rose 4.37 points or 0.14 percent to 3,192.43 points. It was up 1.09 percent and 2.41 percent for the week and month respectively. The trading volume of Shanghai A shares fell to 143 billion yuan from 147.1 billion yuan.