I. Yesterday’s News

1. The U.S. dollar edged lower on Friday, putting in on track for its worst week since early November against a basket of currencies as traders grew uneasy about the scarcity of new information regarding U.S. President-elect Donald Trump's economic policies. U.S. Treasury yields fell on Friday on solid economic data. The S&P 500 also rose after major U.S. banks kicked off the fourth-quarter earnings season with strong results, while the Nasdaq also hit a record high, with financial markets closed on Monday for Martin Luther King Jr. Day.

2. U.S. retail sales rose in December amid strong demand for automobiles and furniture, providing further evidence that the economy ended the fourth quarter with momentum and is poised for stronger growth this year. The strengthening economy is causing inflation to perk up. Other data on Friday showed producer prices rising for a second straight month in December, notching their biggest year-on-year gain in just over two years. A second report showed the University of Michigan's consumer sentiment index slipped one-tenth of a percentage point to 98.1 in early January. Still, sentiment remained near a 13-year high. The Commerce Department reported that retail sales increased 0.6 percent last month after rising 0.2 percent in November. Sales were up 4.1 percent from December 2015. They rose 3.3 percent for all of 2016, up from 2.3 percent in 2015. In a separate report, the Labor Department said its producer price index for final demand increased 0.3 percent last month after advancing 0.4 percent in November. That lifted the year-on-year increase in the PPI to 1.6 percent, the largest gain since September 2014. The PPI rose 1.3 percent in the 12 months through November. Producer prices increased 1.6 percent in 2016 after falling 1.1 percent in 2015. The Commerce Department on Friday said business inventories increased 0.7 percent. That was the biggest increase since June 2015 and followed an upwardly revised 0.1 percent dip in October. Inventories were previously reported to have fallen 0.2 percent in October.

3. OPEC's Secretary-General has confidence in the commitment of oil producers who agreed to an output cut deal last month to ease a global glut. Iraq plans to cut its southern oil exports to 3.1-3.150 million barrels per day (bpd) in January from 3.51 million bpd in December, its OPEC governor said on Friday. Iraq has already lowered its oil exports which stood at 3.077 million bpd on Friday, Falah al-Amri told reporters. Libya's oil production increased to 750,000 barrels per day (bpd), the deputy leader of the U.N.-backed government said, a rise of about 50,000 bpd from last week.

4. Ratings agency DBRS on Friday cut Italy's sovereign credit rating to BBB (high) from A (low) with a stable outlook. After the news, the euro pared its gains against greenback and the yen, and U.S. Treasury bond yields also bounced off highs.

5. JPMorgan Chase & Co , the No. 1 U.S. bank by assets, reported a 23.8 percent rise in quarterly profit on Friday, helped by a surge in investor activity related to the U.S. presidential election. Bank of America Corp, the second-largest U.S. bank, kicked off the quarterly earnings period for big U.S. lenders earlier on Friday, announcing a 46.8 percent rise in profit due to cost cuts and higher trading revenue after presidential election. Wells Fargo & Co, the largest U.S. mortgage lender, reported its fifth straight decline in quarterly profit on Friday as it tries to recover from a bogus-accounts scandal. BlackRock Inc, the world's biggest asset manager, reported a 1.2 percent fall in quarterly profit on Friday as investors rushed into low-cost funds.

6. Foreign direct investment (FDI) to China increased 4.1 percent on the year to 813.22 billion yuan in 2016 (excluding banking, securities and insurance sector), the country's commerce ministry said on Friday. FDI to China in December rose 5.7 percent on the year to 81.42 billion yuan.

II. Market Overview
FX

The U.S. dollar edged lower on Friday, putting in on track for its worst week since early November against a basket of currencies as traders grew uneasy about the scarcity of new information regarding U.S. President-elect Donald Trump's economic policies. The dollar index, which measures the greenback against a basket of six major currencies, was last down 0.16 percent at 101.190. The led to a roughly 1 percent drop for the week. The index had gained earlier Friday, and the dollar had risen as much as 0.6 percent against the yen to a session high of 115.44 yen, after the Commerce Department said retail sales increased 0.6 percent in December. The gains wore off, however, and the dollar was last down 0.11 percent against the yen at 114.58 yen. The dollar was set to drop 2 percent against the yen for the week to mark its worst weekly showing since late July 2016. The euro was last up 0.3 percent at $1.0640 after touching a session low of $1.0597 after the U.S. retail sales data. The euro was set to post its best week against the dollar since early November with a roughly 1 percent gain.

Precious Metals

The price of gold turned higher on Friday, hovering below the prior session's seven-week top as the U.S. dollar weakened and U.S. Treasury yields came off their highs, with the metal on track for a third straight weekly gain. Spot gold was 0.2 percent higher at $1,197.99 an ounce. It was up 2.1 percent on the week. U.S. gold futures settled down 0.3 percent at $1,196.20 per ounce.

Commodities
1.Crude Oil

Oil prices fell on Friday and ended the week 3 percent lower on lingering doubts over the extent of OPEC cuts, with sentiment worsened by concerns over the economic health of the world's second-largest oil consumer, China, after it reported the steepest falls in overall exports since 2009. Brent crude futures settled 56 cents lower at $55.45 a barrel, ending the week with a loss of about 3 percent. U.S. crude futures settled down $0.64 to $52.37 a barrel, posting a loss of 3 percent for the week.

2. Base Metals

Copper hit a five-week high on Friday while aluminium climbed to its highest in nearly 20 months on optimism about metals demand following strong economic data from top metals consumer China and the United States. Benchmark copper on the London Metal Exchange surged to an intraday peak of $5,912 a tonne, the highest since Dec. 7. At the close it was bid up 1.2 percent at $5,909, having failed to trade in closing open outcry activity. Copper gained over 5 percent on the week, the biggest weekly rise since late November. LME aluminium gained 1.1 percent to end at $1,809 a tonne, the highest since May 19, 2015.

U.S. Treasuries

U.S. Treasury yields rose Friday as data supporting the notion of a steady U.S. economic expansion and rising Wall Street stock prices stoked selling in low-risk government bonds. Friday's yield increase pared some of the week's fall tied to traders scaling back bond bets on potentially higher inflation and federal borrowing under the incoming Trump administration and a Republican-controlled Congress. The rise in yields also stemmed from traders locking in recent gains ahead of the three-day U.S. Martin Luther King Jr. Weekend. The benchmark 10-year Treasury yield was up 3 basis points at 2.391 percent after it fell to 2.307 percent, its lowest in six weeks. The 10-year yield fell for a fourth straight week, Reuters data showed. Euro zone bond yields rose on Friday after comments from U.S. policymakers prompted concerns that the United States' monetary policy could tighten faster than previously expected. Euro zone bond yields rose 1-5 bps across the board. Germany's 10-year bond yield, the benchmark for the region, climbed 3.5 bps to 0.27 percent -- heading back towards recent three-week highs at around 0.33 percent. Thirty year bond yields rose to a one-month high at 1.11 percent.

Stock Market
1. U.S. Equities

An increase in Facebook pushed the Nasdaq to a record high on Friday and the S&P 500 also rose after major U.S. banks kicked off the fourth-quarter earnings season with strong results. The Nasdaq Composite added 0.48 percent to a record-high close of 5,574.12, bringing its gain so far this year to 3.55 percent. The Dow Jones Industrial Average slipped 5.27 points or 0.03 percent to 19,885.73, while the S&P 500 gained 4.20 points or 0.185 percent to 2,274.64. For the week, the Dow fell 0.4 percent, the S&P 500 shed 0.1 percent and the Nasdaq gained 1 percent. European shares rose on Monday, led higher by banks stocks, with Britain's blue chip index finishing at an all-time high after extending a record winning streak to 14 days. While the pan-European STOXX 600 added 0.95 percent. The European banking index was the top sectoral gainer, up 2 percent, helped by strong earnings from large lenders in the U.S. and the outlook for higher interest rates in the world's largest economy.

2. Hong Kong Equities

Hong Kong stocks rebounded on Friday to cap a three-week winning streak, helped by strength in the energy sector and heavyweight China Vanke Co Ltd , the mainland's second largest developer. The benchmark Hang Seng index added 0.47 percent, to 22,937.38 points, hitting a 2-1/2-month closing high, while the Hong Kong China Enterprises Index gained 0.66 percent, to 9,787.34 points.