I. Yesterday's News
International News
1. Former FBI Director James Comey said on Wednesday that U.S. President Donald Trump asked him to drop an investigation of former national security adviser Michael Flynn as part of a probe into Russia's alleged meddling in the 2016 presidential election. In written testimony released the day before he appears before the Senate Intelligence Committee, Comey said Trump told him at a meeting in the White House in February: "I hope you can see your way clear to letting this go, to letting Flynn go." The testimony puts more pressure on Trump, a Republican, whose presidency has been overshadowed by allegations that Moscow helped him win last year's election. U.S. stocks closed higher, the dollar index rose slightly, while Treasury yields and gold prices fell rose on Wednesday as the written testimony from the ex-FBI chief was seen as containing few surprises

2. Prime Minister Theresa May is on course to increase her majority in parliament in Britain's election on Thursday, opinion polls showed on Wednesday, suggesting her gamble to call the vote to bolster her position in Brexit negotiations will pay off. Of six polls published on Wednesday, two showed the Conservatives widening their lead over Labour, two showed a narrowing and two were unchanged. But they mostly suggested she would increase the small majority in parliament.

3. The European Central Bank is likely to stick to its aggressive stimulus policy at its meeting on Thursday because inflation remains below its target, despite brisker economic growth in the euro zone. The mixed outlook should strengthen the case for keeping the ECB's policy of bond purchases and sub-zero rates in place, despite growing calls from Germany for a gradual tightening. The sources said any change would be small, in some cases as little as 10 basis points, reflecting an adjustment rather than an overhaul of the March projections.

4. Japan's index gauging the current state of the economy hit a nine-year high in April, government data showed on Wednesday, a sign a solid recovery was taking hold thanks to improvements in the global economy. The index of coincident economic indicators rose 3.3 point from the previous month to 117.7 in April, the highest level since February 2008. The government uses the coincident index to make a preliminary judgmement on whether the economy is recovering or in recession. The index measuring the outlook for the economy, compiled using leading indicators like job offers and consumer sentiment, fell 1.2 point to 104.5 after two straight month of rises.

5. Australia's economy squeezed out just enough growth last quarter to match the Netherlands' record of 103 quarters without recession, but its stamina is in doubt as households struggle with paltry wage rises and punishing debt. Government data out on Wednesday data showed gross domestic product (GDP) rose a pedestrian 0.3 percent in the first quarter, a pullback from the previous quarter's rapid 1.1 percent. Wednesday's result should be a relief for the Reserve Bank of Australia (RBA) which just the day before conceded the March quarter would likely disappoint. But the central bank expressed confidence growth would pick up over the next couple of years to above 3 percent.

Domestic News
6. China's foreign exchange reserves rose $24.034 billion in May, up for a fourth consecutive month. The euro and yen among major reserve currencies rose 3.18 percent and 0.70 percent respectively, while sterling fell 0.45 percent. The dollar index slipped 2.15 percent for the month. Assuming that the currency composition in China's FX reserve is similar to other countries, the value of China' FX reserve increased $19.9 billion to $21.8 billion in May, suggesting an increase of $2.2-4.2 billion out of regulator's regulation, higher than April's 1.8 billion.

7. China is seeking a new path for urban development through Xiongan New Area, Xu Kuangdi, director of a council of experts for coordinated development of the Beijing-Tianjin-Hebei (Jing-Jin-Ji) region said Tuesday, stressing that development of the new economic zone will not be "kidnapped" by property developers.

8. One survey showed returns of investment and risk appetite for current assets among China's middle class declined largely, and more households are cutting their spending among liquidity tightness, disappointing stock market, property regulation, China's Bank of Communications Co Ltd (BoCom) said.

9. Liquidity of China's interbank market eased in the morning session, shrugging off the impact of net repo in open market. The supply and demand was more balanced after yesterday's MLF operations.

10. Russia put off its plans to borrow in yuan the last minute as it did not meet a condition laid down by Beijing - to borrow by issuing Panda bonds on China's domestic market, Russia's deputy finance minister Sergei Storchak said. Russia wanted to borrow yuan by the end of 2016, what was seen as a step towards Moscow's ambition of using Asian debt markets to compensate for its limited access to Western funding. Seeking to limit capital outflows, Chinese authorities were not ready to let its local investors play on the Russian bond market, Storchak said. China had instead offered Russia to raise funds via Panda bonds. The finance ministry is now taking its time to study requirements of its Chinese partners, Storchak said.

II. Market Overview
FX
1. Global Market
The euro weakened against the greenback on Wednesday in choppy trading ahead of Thursday's European Central Bank policy announcement and the UK general election. The common currency was down 0.14 percent at $1.1259 after hitting a low of $1.1205 on reports suggesting the ECB Bank would lower its inflation targets. The euro pared losses after a Reuters report cited sources as saying that the ECB is likely to nudge up its forecasts for economic growth in the euro zone even as it trims its inflation estimates. The dollar index, which tracks the greenback against six major rivals, was up 0.06 percent at 96.698. Sterling rose 0.41 percent against the dollar to $1.296, with investors increasingly taking the view that Prime Minister Theresa May's party will win a majority in the election on Thursday.

2. Home Market
China's yuan extended gains against the U.S. dollar on Wednesday, but failed to cross over last Friday's highs. A weaker dollar index pushed the official midpoint up, but bargain hunting capped Forex prices' potential for a rebound.

Precious Metals
Gold prices fell from near seven-month highs on a stronger dollar and after a written testimony by a former FBI director to the U.S. Senate was seen as containing few surprises, but declines were limited as uncertainty from the UK election remained. Spot gold was down 0.5 percent at $1,286.41 an ounce. On Tuesday, it gained 1.1 percent to its highest since November last year at $1,295.97. U.S. gold futures slipped to settle at $1,293.2.

Commodities
1.Crude Oil
Oil prices slid 5 percent on Wednesday to a one-month low, after an unexpected increase in U.S. inventories of crude and gasoline fanned fears that output cuts by major world oil producers have not done much to drain a global glut. U.S. crude futures settled down 5 percent, or $2.47 a barrel, at $45.72 a barrel, the lowest settlement for U.S. crude since May 4. U.S. benchmark futures have slid more than 11 percent in 10 days of trading. Brent crude prices fell $2.06, or 4 percent to settle at $48.06 a barrel.

2.Base Metals
Copper prices rose on Wednesday after three days of declines as investors judged that a sell-off had run its course despite weaker than expected German manufacturing data that pointed to lower demand, while tin fell to its lowest in three months. Three-month copper on the London Metal Exchange closed up 0.1 percent at $5,621 a tonne. The metal used in power and construction has fallen nearly 2 percent from a high of $5,720 on June 1. Three-month tin closed down 1.9 percent at $19,310, after earlier touching $19,260, a low since March 13.

U.S. Treasuries
1. U.S. Bonds
U.S. Treasury debt prices dropped on Wednesday, after comments from former FBI director James Comey on the bureau's investigation into Russia's alleged interference in the 2016 U.S. presidential election were viewed by investors as less damaging than they initially thought. Benchmark U.S. 10-year yields hit session highs after the prepared text of Comey's testimony was posted on the Senate Intelligence Committee's website. The remarks will be delivered on Thursday before the Senate panel. In late trading, U.S. 10-year Treasuries were last down 8/32 in price, with yields at 2.176 percent, from 2.147 percent late on Tuesday. U.S. 30-year bonds fell 16/32 in price, yielding 2.835 percent, compared with Tuesday's 2.81 percent. U.S. two-year yields were at 1.314 percent, from 1.298 percent late on Tuesday.

2. Chinese bonds
China's debt market weakened on Wednesday, with the yields of 10-year government debt rising sharply. While yields of government debt futures slipped due to weak auction. The final yields were well above expectation, with margin yields not as bearish as expected. Investors shall keep on an eye on whether the product could steady in the afternoon.

Stock Market
1. U.S. Equities
U.S. stocks rose on Wednesday despite a sharp decline in energy shares after written testimony from former FBI director James Comey did not add major revelations about an investigation into Russian meddling with last year's U.S. presidential election. The Dow Jones Industrial Average rose 37.46 points, or 0.18 percent, to 21,173.69, the S&P 500 gained 3.81 points, or 0.16 percent, to 2,433.14 and the Nasdaq Composite added 22.32 points, or 0.36 percent, to 6,297.38.

2. Hong Kong Equities
Hong Kong stocks ended Wednesday lower after hitting a fresh 23-month intraday high, with more listed companies in the city targeted by short-sellers. The Hang Seng index fell 0.1 percent, to 25,974.16, while the China Enterprises Index gained 0.1 percent, to 10,611.46 points.

3. China Equities
China's stocks closed up 1.2 percent on Wednesday, hitting a one-month high. Individual stocks rose across board with trading volume expanding after gaping up. Despite of an improved sentiment, technical pressure mounted at around 3,150. The Shanghai Composite Index rose 38.19 points or 1.23 percent at 3,140.32, with distance from previous highs of 3,143.71 hit on May 2. The trading volume surged over 50 percent to 194.1 billion yuan from 127.7 billion yuan. The CSI 300 ended at 3,533.87, up 0.7 percent. The benchmark CSI June futures settled 1.65 percent higher at 3,533.