I. Yesterday's News
International News
1. The Federal Reserve is setting the stage for a U.S. interest-rate increase later this month, with another policymaker Wednesday making the case that economic strength at home and stability abroad have created a window for action. "I believe the economy is strong enough that we can manage it," Dallas Fed President Robert Kaplan, a voting member this year on the Fed's policy committee, said on Wednesday. "We should begin the process sooner so we can ensure that it is gradual and patient." The comments were the latest in a period with an unusually high concentration of Fed speeches, with four out of five Federal Reserve Governors - including Chair Janet Yellen - speaking this week ahead of the March 14-15 rate meeting. New internal Fed rules on public communications make Friday the last chance to set up market expectations before the next Fed meeting. An improving global economy and a solid U.S. recovery mean it will be "appropriate soon" for the Federal Reserve to raise U.S. interest rates Fed Governor Lael Brainard said on Wednesday, adding an important voice to the chorus of officials signalling rates may rise as soon as mid-March.

2. U.S. consumer spending cooled in January as demand for automobiles and utilities fell, but inflation recorded its biggest monthly increase in four years, raising the probability of an interest rate hike from the Federal Reserve this month. The tepid gain in consumer spending added to weak housing starts, equipment spending and construction data in suggesting economic growth remained moderate early in the first quarter after slowing in the final three months of 2016. Despite the softness on the demand-side of the economy, the manufacturing sector recovery is gaining steam. Factory activity hit a 2-1/2-year high in February, other data showed on Wednesday. In a separate report on Wednesday, the Institute for Supply Management said its index of national factory activity increased to a reading of 57.7 last month, the highest since August 2014, from 56.0 in January. A reading above 50 indicates an expansion in manufacturing.

3. The Bank of Canada held interest rates steady on Wednesday as it stayed focused on the "significant uncertainties" facing the economy, even while acknowledging fourth-quarter growth may have been stronger than anticipated. The central bank said it was looking past the temporary impact of higher energy prices that drove inflation above its 2 percent target in January, noting that muted underlying inflation continued to point to material excess capacity. The bank said it was continuing to monitor the risks contained in its January Monetary Policy Report (MPR), which included the lack of clarity over what policies new U.S. President Donald Trump will enact.

4. Euro zone manufacturing growth accelerated to a six-year high in February as a weaker euro helped drive strong demand for its exports. The IHS Markit euro zone manufacturing Purchasing Managers' Index rose to 55.4 in February — the highest reading since April 2011 — from 55.2 in January, although it inched down from a flash estimate of 55.5. That reading is well above the 50 mark denoting growth and suggests a solid pickup in activity. An index measuring output jumped to 57.3, which was also the highest in nearly six years. "Euro area manufacturers are reporting the strongest production and order book growth for almost six years, in what's looking like an increasingly robust upturn," said Chris Williamson, chief business economist at IHS Markit.

5. Conservative French presidential candidate Francois Fillon abruptly postponed a high-profile campaign event on Wednesday and a newspaper reported he had been summoned by magistrates investigating allegations over payments to his wife. Fillon's campaign team was silent on the reasons for his last-minute decision to delay his visit to the annual Paris agricultural fair, viewed as an essential campaign stop for presidential candidates. The investigation has unnerved investors who fear Fillon's campaign woes have handed the anti-euro, anti-immigration Marine Le Pen of the National Front a higher chance of winning the presidency. Conservative Francois Fillon promised on Wednesday to fight "to the end" in France's presidential election despite a deepening financial scandal.

6. President Donald Trump told Congress on Tuesday he opened the door on Tuesday to a broad overhaul of the U.S. immigration system, a shift from his hardline campaign rhetoric. He emphasized his desire to focus on problems at home by boosting the U.S. economy with tax reform, a $1 trillion infrastructure effort and an overhaul of President Barack Obama's signature healthcare law, known as Obamacare. U.S. Stock index futures rose after Trump's speech, but pared some gains later in the session.

7. China expressed concerns on Tuesday over what it said was increasing protectionism after European Union regulators imposed new duties on steel imports from the world's biggest producer. European Union imposed definitive anti-dumping duties of between 65.1 percent and 73.7 percent on imports of heavy plate non-alloy or other alloy steel from China on Tuesday, confirming provisional tariffs set in October. China expressed concern over the European Commission's trade measures against Chinese products this year. "China is paying close attention to and worried about the European Union (EU)'s tendency toward steel protectionism," said Wang Hejun, a senior official of the Ministry of Commerce.

8. Japan will tell the United States in their economic talks that any border tax the U.S. government imposes on imports should not break World Trade Organization rules, an adviser to Prime Minister Shinzo Abe said on Wednesday. Yasutoshi Nishimura also said Japan would not rule out a bilateral trade agreement with the United States, but talks may not start soon because Washington is putting a higher priority on renegotiating the North America Free Trade Agreement.

9. Australia's economy rebounded sharply last quarter as commodity exports boomed while consumers and the government lifted spending, extending the resource rich nation's 25-year streak of uninterrupted expansion. Growth for the year also surprised at 2.4 percent, up from 1.9 percent and ahead of most of Australia's rich world peers - an outcome that virtually shuts the door to any further rate cuts this year.

10. British house price rose more quickly than expected in February, recovering from the weakest month for more than a year in January but concerns about Brexit are likely to weigh on the market in 2017, mortgage lender Nationwide said on Wednesday. Nationwide said house prices rose by a monthly 0.6 percent in February, compared with 0.2 percent in January. In annual terms, prices were 4.5 percent higher, a stronger rise than January's 4.3 percent.

Domestic News
11. China will stick to the basic economic theme of "seeking progress while maintaining stability" this year to achieve healthy development, President Xi Jinping said on Tuesday. The nation will strive to improve the quality and efficiency of the economy, deepen supply-side structural reform, and make major headway in economic restructuring, Xi said at a meeting of the Central Leading Group on Finance and Economic Affairs.

12. The official and Caixin Purchasing Managers' Index (PMI) rebounded sharply in February, confirming that China's manufacturing sector, shrugging off the disruption of the Spring Festival, is gaining momentum, and boding well for an acceleration in China's economic recovery. The official PMI rose to a three-month high of 51.6 in February, compared with analysts forecast of 51.1, and above the 50-point mark that separates growth from contraction for seven consecutive week. The official non-manufacturing PMI stood at 54.2 in February, down from 54.6 in January. The Caixin/Markit PMI rose to 51.7 with a robust new export orders .

13. Human Resources and Social Security Minister Yin Weimin warned of a "grave" employment situation and serious structural contradiction in China on Wednesday due to serious economic downturn and tough mission of capacity cut. China's urban registered unemployment rate will remain at around 4.5 percent in 2017, Yin said.

14. U.S. Secretary of State Rex Tillerson and Chinese State Councilor Yang Jiechi on Tuesday discussed improving and maintaining a “mutually beneficial economic relationship” between the United States and China, the State Department said.

15. China expressed concerns on Tuesday over what it said was increasing protectionism after European Union regulators imposed new duties on steel imports from the world's biggest producer. It imposed definitive anti-dumping duties of between 65.1 percent and 73.7 percent on imports of heavy plate non-alloy or other alloy steel from China on Tuesday, confirming provisional tariffs set in October.

16. China on Friday expressed concern over the European Commission's anti-dumping investigations into Chinese corrosion-resistant steel, the latest in a series of trade measures against Chinese products this year. "China is paying close attention to and worried about the European Union (EU)'s tendency toward steel protectionism," said Wang Hejun, a senior official of the Ministry of Commerce.

17. Beijing's cautious policy tone and tighter credit conditions are expected to continue to weigh on the property market this year, as Chinese leaders have pledged to stem the growth of asset bubbles and prevent financial risks in 2017.
Home prices across the nation are expected to rise a median 5 percent in the first half of the year and remain unchanged in the second half of the year from a two-digit growth last year.

18. Wang Shuaiting, former executive of China Travel Service (Holdings) Hong Kong Ltd., was sentenced to 16 years in prison for accepting bribes and embezzling public funds, a court said Tuesday. According to Shenzhen Municipal Intermediate People's Court, south China's Guangdong Province, Wang was also fined 1.2 million yuan.

19. Gambling revenue in the Chinese territory of Macau surged 17.8 percent in February, the largest growth for the same priod and rising for the seventh straight month.

II. Market Overview
FX
1. Global Market
The dollar hit a seven-week high on Wednesday after hawkish comments from two Federal Reserve officials late on Tuesday boosted expectations that the U.S. central bank is closer to raising interest rates. The U.S. dollar rose 0.6 percent against a basket of six major currencies to 101.73, after earlier reaching 101.97, its highest since Jan. 11. Against Japan's curency, the greenback climbed 1.05 percent to touch a two-week high of 114.04 yen. Sterling and the Canadian dollar weakened against the greenback to their lowest levels since Jan. 20.

2. Home Market
China's yuan fell against the dollar along with a lower midpoint rate, trading in a tighter range on Wednesday. Yuan bounced off closer to yesterday's closing price, but U.S. President Trump's speech at Congress was muted in market, traders said. As the Two Sessions (NPC and CPPCC sessions) coming closer, yuan can hardly breach the trading range formed since mid-January.

Precious Metals
Gold gave back most of its losses on Wednesday as the dollar pared gains and bullion shrugged off earlier pressure from U.S. Federal Reserve officials' comments that raised expectations of an interest rate hike in March. Spot gold was down at $1,246.86 an ounce. U.S. gold futures settled down 0.3 percent at $1,250.

Commodities
1.Crude Oil
Oil prices ended slightly lower on Wednesday as record high U.S. crude supplies tempered expectations that the market will rebalance as evidence emerges that OPEC producers are complying with an agreement to cut production. U.S. West Texas Intermediate (WTI) futures for April delivery settled at $53.83 a barrel, down 18 cents or 0.3 percent. May Brent crude futures dropped 15 cents, or 0.3 percent, to $56.36 a barrel.

2.Base Metals
Copper prices rose to their highest in more than a week on Wednesday as manufacturing data from top consumer China showed potential for strong demand, reinforcing worries about shortages due to supply disruptions. Benchmark copper on the London Metal Exchange ended up 0.7 percent at $6,016 a tonne from an earlier $6,090, its highest since Feb. 21. Three-month aluminium rose 1.3 percent to $1,949 a tonne from an earlier $1,957, its highest since May 2015. Zinc gained 1.3 percent to $2,862, lead rose 2.1 percent to $2,305.5, tin was up 1.6 percent to $19,525 and nickel added 0.5 percent to $11,030.

U.S. Treasuries
1. U.S. bonds
U.S. Treasury yields rose broadly on Wednesday, with the 2-year's hitting a more than seven-year high, on increased expectations that the Federal Reserve will raise U.S. overnight interest rates at its March meeting. Yields on the 2-year Treasury note rose to 1.308 percent, their highest since August 2009. The yield on 10-year notes rose to 2.471 percent, the highest since Feb. 16. Prices on 30-year bonds fell by more than 2 points, pushing yields to 3.074 percent, the highest since Feb. 16.

2. Chinese bonds
China's interbank money rates firmed in the morning session, but government bonds fell. China's Purchasing Managers' Index (PMI) bodes for a expanding manufacturing sector. Forecasts for higher inflation in U.S. boosted expectations that the U.S. central bank is closer to raising interest rates, sending U.S. Treasury yields higher and putting home cash bonds under pressure. China's bond futures open lower and gaped down near the noon session.

Stock Market
1. U.S. Equities
The Dow on Wednesday blasted through the 21,000 mark for the first time after U.S. President Donald Trump's measured tone in his first speech to Congress lifted optimism and investors viewed a looming interest rate hike as a glass half full. The Dow Jones Industrial Average jumped 303.31 points or 1.46 percent to end at 21,115.55, while the S&P 500 rallied 32.32 points or 1.37 percent to 2,395.96. The Nasdaq Composite climbed 78.59 points or 1.35 percent to 5,904.03.

2. Hong Kong Equities
Hong Kong shares edged higher on Wednesday, snapping a four-day losing streak, helped by better-than-expected Chinese official and private factory activity surveys. The benchmark Hang Seng index added 0.2 percent, to 23,776.49. The Hong Kong China Enterprises Index lost 0.1 percent, to 10,287.98, as investors locked in profits after sharp recent share-price gains in Hong Kong.

3. China Equities
China stocks rose for the second consecutive day, lingering at highs under heavy resistance from previous highs, analysts said. Profit-taking and lockup would dominate the market in near term, but losses would be limited. Major indexes are expected to go sideways with a bullish tone in the medium and longer term.