I. Yesterday's News
1. The Commerce Department said on Tuesday the trade gap rose 17.8 percent in October, the largest increase since March 2015, to US$42.6 billion as exports of soybeans and other products fell, suggesting trade would be a drag on growth in the fourth quarter. In October, exports to the European Union fell 1.1 percent, with goods shipped to the United Kingdom tumbling 12.2 percent. But exports to China surged 32.8 percent to their highest level since December 2013. Imports from China rose 4.2 percent to their highest level in a year. The politically sensitive U.S.-China trade deficit fell 4.2 percent to $31.1 billion in October. A second report from the Commerce Department on Tuesday showed new orders for manufactured goods rose 2.7 percent in October after increasing 0.6 percent in September. That was the largest increase since June 2015 and marked four straight months of gains. Unfilled orders at factories increased 0.7 percent, the biggest rise since July 2014, ending four consecutive months of decline. The report pointed to an upturn in manufacturing after a prolonged slump that helped to erode economic growth.

2. The British government has accepted the opposition Labour Party's call for it to set out its plan for leaving the European Union before formal talks begin, but has asked parliament to respect its Brexit timetable. It is not clear how much detail the government will give of its plan beyond its mantra that it wants "the best deal to trade with and operate within" the EU's single market, alongside some curbs on freedom of movement. Michel Barnier, the top Brexit negotiator for the European Union said terms of the deal would need to be resolved by October 2018, slapping an 18-month time limit on deal talks with the United Kingdom.

3. Japan is considering issuing additional deficit-covering bonds worth around 1.9 trillion yen ($17 billion) to offset an expected tax revenue shortfall in the current fiscal year to March, government sources told Reuters on Tuesday. A rise in deficit-covering bonds would further strain Japan's public finances and mark a setback for Prime Minister Shinzo Abe's efforts to curb the developed world's heaviest debt burden. The government expects tax revenues to undershoot its initial forecast of 57.6 trillion yen by around 1.9 trillion yen, which would mark the first downward revision since fiscal year 2009 when the global financial crisis dented tax receipts.

4. German industrial orders rose in October at their fastest pace for more than two years, data showed on Tuesday, suggesting that the industrial sector will prop up growth in Europe's largest economy in the coming months. Factories saw demand climb 4.9 percent on the month, the Economy Ministry said. That was the biggest increase since July 2014 and far above the Reuters consensus forecast for a 0.6 percent rise. A breakdown of Tuesday's data showed domestic demand climbed 6.3 percent while foreign orders increased 3.9 percent despite a stagnation in contracts from the euro zone. A 7.2 percent surge in capital goods contracts drove the overall increase while factories making consumer goods and intermediate goods benefited from stronger demand.

5.Australia's central bank held rates steady at its last policy meeting of the year today. But the Reserve Bank of Australia sounded a note of caution on economic growth after a run of soft data pointed to a possible contraction in the third quarter.  The RBA ended today's meeting with rates at a record low of 1.5% following two easings this year, but conceded the annual pace of growth was set to slow. Governor Philip Lowe also dropped a reference to the economy growing at potential in his statement.

II. Market Overview
FX
The euro slipped from three-week highs against the U.S. dollar on Tuesday, following a strong rally on Monday, as investors awaited Thursday's highly anticipated European Central Bank policy meeting. The euro was last down 0.46 percent against the dollar, at $1.0713, after hitting a three-week high of $1.0796 on Monday. The dollar index, which measures the greenback against a basket of six major currencies, rose 0.41 percent to 100.50, after dropping to 99.849 on Monday.

Precious Metals
Gold hovered near 10-month lows on Tuesday as the market braced for an increase in U.S. interest rates this month and anticipated more monetary tightening next year.
Spot gold was down at $1,169.64 an ounce. U.S. gold futures settled down $6.4, or 0.54 percent, at $1,170.1 per ounce.

Commodities
1.Crude Oil
Oil prices on Tuesday ended lower for the first time in a week since OPEC agreed to cut output on growing skepticism that the cartel would be able to reduce supplies as data showed record high production in most major export regions. After rising over 15 percent over the four sessions since the Nov. 30 OPEC meeting, Brent futures lost $1.01, or 1.8 percent, to settle at $53.93 a barrel, while U.S. West Texas Intermediate (WTI) crude futures fell 86 cents, or 1.7 percent, to $50.93 per barrel.

2. Base Metals
Copper prices fell on Tuesday as investors cashed in gains after the previous session's rally on concerns that a surge in base metals prices over the last month had left markets overstretched. Three-month copper on the London Metal Exchange (LME) closed down 1.1 percent at $5,884 a tonne. Zinc reversed losses to close up 1.2 percent at $2,800 a tonne. Aluminium closed down 1.5 percent at $1,709 a tonne.

U.S. Treasuries
Most U.S. Treasury yields were little changed on Tuesday, holding in narrow ranges as traders awaited possible clues from the European Central Bank on its bond purchase program following its policy meeting on Thursday. The benchmark 10-year Treasury yield was 2.394 percent, up 0.7 basis point from Monday, while the 30-year bond yield was 3.080 percent, up 2.5 basis points. The U.S. two-year note yield was 1.120 percent, down 0.4 basis point and not far below its highest level since April 2010 reached in late November.

Stock Market
1. U.S. Equities
Wall Street climbed on Tuesday as telecom stalwarts AT&T and Verizon gained and bank shares added to their torrid post-election rally, helping the Dow set another record closing high. The Dow Jones industrial average rose 35.54 points, or 0.18 percent, to 19,251.78, the S&P 500 gained 7.52 points, or 0.34 percent, to 2,212.23 and the Nasdaq Composite added 24.109 points, or 0.45 percent, to 5,333.001.

2. Hong Kong Equities
Hong Kong stocks joined many other markets in rising on Tuesday, more than erasing losses incurred the previous day after Italians rejected a referendum on reforms. But Tuesday's gains were limited as investors poured less-than-expected amounts into the Hong Kong bourse on the second day of operation for the Shenzhen-Hong Kong Stock Connect. Net inflows into Hong Kong stock market through the connect were 520 million yuan ($75.64 million) at the close, only 5 percent of the daily quota, data on the Shenzhen Stock Exchange website showed. The benchmark Hang Seng index advanced 0.8 percent, to 22,675.15 points, while the Hong Kong China Enterprises Index gained 0.6 percent, to 9,768.85 points.