I. Yesterday's News
International News
1. The dollar index, which tracks the dollar against six major peers, fell on Friday, retreating further from a one-month peak reached on Thursday. The yield curve of U.S. Treasuries held near its flattest levels in almost 10-years as expectations of low inflation continued to boost demand for longer-dated debt, while U.S. stocks ended higher.

2. Rate hikes needed given U.S. economy 'pretty good'. Cleveland Fed president Loretta Mester said on Friday that recent inflation weakness was likely temporary and it should not delay another interest-rate hike this year. St. Louis Fed President James Bullard said he would advocate shrinking the balance sheet down to $2 trillion, a normal level in the long term, in around five years.

3. New U.S. single-family home sales rose in May and the median sales price surged to an all-time high, suggesting the housing market had regained momentum. The Commerce Department said on Friday new home sales increased 2.9 percent to a seasonally adjusted rate of 610,000 units last month. April's sales pace was also revised sharply higher to 593,000 units from 569,000 units. Economists polled by Reuters had forecast new home sales rising 5.4 percent to a pace of 597,000 units last month. Sales were up 8.9 percent on a year-on-year basis in May.

4. Four Arab states boycotting Qatar over alleged support for terrorism have sent Doha a list of 13 demands including closing Al Jazeera television and reducing ties to their regional adversary Iran, an official of one of the four countries said. The countries give Doha 10 days to comply. The demands were handed to Qatar by mediator Kuwait.

5. U.S. ratings agency Moody's Investors Service upgraded Greece's long-term issuer rating to 'Caa2'. Moody's also changed the outlook to positive from stable. Fitch Ratings has affirmed Belgium's Long-term foreign and local currency Issuer Default Ratings (IDRs) at ‘AA-’ with a Stable Outlook.

6. Theresa May offered fellow EU leaders a "fair" deal on Thursday for compatriots living in Britain after Brexit, though her peers sounded sceptical and demanded more detail. Given the floor for 10 minutes at the end of a Brussels summit dinner, her first since she launched the two-year withdrawal process in March, May outlined five principles, notably that no EU citizen resident in Britain at a cut-off date would be deported.

Domestic News
7. China will cut the retail prices of gasoline and diesel from June 23 following a drop in global oil prices, the country's top economic planner said Friday. Gas price will decrease by 250 yuan per ton, while the diesel price will be lowered by 240 yuan per ton, according to the National Development and Reform Commission (NDRC).

8. China's foreign exchange regulator said that it will work for the facilitation of cross-border trade and investment, and strengthen supervision of the forex market. Pan Gongsheng, head of the State Administration of Foreign Exchange, said the body would further raise the convenience of cross-border trade and investment, as well as provide better service to overseas opening up in addition to the real economy. It will also continue reforms in FX management to reinforce building of supervision ability.

9. Russia has maintained its spot as China's top crude oil supplier and Angola clung onto the second spot over Saudi Arabia, data from Chinese customs for May imports showed on Friday. Russia supplied a record 1.35 million barrels per day (bpd), to China last month, data showed.

II. Market Overview
FX
1. Global Market
The dollar fell against a basket of major currencies on Friday, recording its biggest one-day fall in three weeks, on persistent doubts whether the Federal Reserve would raise interest rates again this year due to softening inflation data. The dollar index, which tracks the dollar against six major peers, fell 0.35 percent at 97.248, retreating further from a one-month peak reached on Tuesday. The euro was up 0.44 percent at $1.1198, while the greenback slipped nearly 0.1 percent against the yen, to 111.25 yen. The pound gained 0.4 percent at $1.2725. The Australian dollar was up 0.5 percent at $0.7575.

2. Home Market
China's yuan weakened over 100 bps on Friday, hitting an intra-month low at 6.8435 yuan, a 500-bp-fall from the peak touched in mid-June. While the midpoint rates fell for the fourth consecutive day. Mid-year is conventional high season of FX buying that would in return send yuan lower into July, traders said.

Precious Metals
Gold prices climbed to one-week highs on Friday, boosted by a weaker dollar, economic and political uncertainty around the world, as well as the limited prospect of further interest rate rises in the United States. Spot gold was up 0.44 percent at $1,255.7 an ounce after earlier touching a session high at $1,258.81. U.S. gold futures rose 0.6 percent to settle at $1,256.4. Prices were on track for their first weekly percentage gain in three weeks.

Commodities
1.Crude Oil
Oil futures edged higher on Friday with a lift from a weaker dollar, but finished a fifth straight week lower as OPEC-led production cuts have failed to substantially reduce a global crude glut. Brent futures settled up 32 cents, or 0.7 percent, to $45.54 a barrel. U.S. West Texas Intermediate crude (WTI) ended up 27 cents, or 0.6 percent, at $43.01 per barrel. For the week, both benchmarks lost 3.9 percent, and oil currently sits just off 10-month lows. The five-week slide represents the longest stretch of weekly declines for the front-month contracts since August 2015.

2.Base Metals
Copper prices reached their highest since April 7 on Friday as rising Chinese stock markets and strong European manufacturing data prompted investors to bet on higher prices. Zinc meanwhile was on track for its biggest weekly gain since November as inventories continued to fall, raising supply fears. London Metal Exchange copper closed up 1 percent at $5,800 a tonne after earlier touching a 2-1/2 month high of $5,854.50. Three-month zinc finished up 0.2 percent at $2,704 a tonne and was on track for a weekly gain of around 7 percent, the most in seven months.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasuries yields were little changed on the day on Friday and the yield curve held near its flattest levels in almost 10-years as expectations of low inflation continued to boost demand for longer-dated debt. The yield curve flattened this week as oil prices declined and concerns lingered over last week’s weaker-than-expected Consumer Price Index report. The yield curve was last at 96 basis points after flattening to 95 basis points on Thursday, the lowest since December 2007. Benchmark 10-year notes were unchanged on the day in price to yield 2.15 percent.

2. Chinese bonds
Liquidity in China’s interbank bond market remained eased. Last two days’ loser cash bonds recovered, while yields of 10-year T-bonds dropped. T-bond futures reversed the losing course into positive territory. Bond names, including Wanda that slumped in panic the previous trading session, steadied for the time being.

Stock Market
1. U.S. Equities
U.S. stocks diverged on Friday after a technology sector gain offset weakness in financial stocks and sent the Nasdaq higher, giving it a weekly gain for the first time in three weeks. The Dow Jones Industrial Average closed down 2.53 points, or 0.01 percent, to 21,394.76, the S&P 500 gained 3.8 points, or 0.16 percent, to 2,438.3 and the Nasdaq Composite added 28.57 points, or 0.46 percent, to 6,265.25. For the week, the Dow added 0.05 percent, the S&P rose 0.21 percent and the Nasdaq gained 1.84 percent.

2. Hong Kong Equities
Hong Kong shares were little changed on Friday, and roughly flat for the week, amid concerns that MSCI's decision this week to include China-listed shares to its emerging market benchmark could weaken the city's role as a gateway to investing in China. The Hang Seng index was unchanged at 25,670.05, while the China Enterprises Index gained 0.3 percent, to 10,430.04 points.

3. China Equities
The Shanghai Composite Index edged higher in volatile trading led by heavy weights including insurance and banks. Seesaw trading is expected in coming sessions, but across-the-board and deep decline is unlikely.