I. Yesterday's News
1. German industry output rose for the second consecutive month in November with exports jumped more than expected, which drove growth in Europe's biggest economy in the final quarter. Industrial production edged up 0.4 percent on the month, the Economy Ministry said. This was slightly weaker than the consensus forecast in a Reuters poll for a rise of 0.6 percent. The October reading was revised up to a rise of 0.5 percent from a previously reported rise of 0.3 percent. Separate data released from the Federal Statistics Office showed on Monday that seasonally adjusted exports rose by 3.9 percent on the month. This was the strongest monthly gain since May 2012 and was better than the consensus forecast in a Reuters poll for a rise of 0.5 percent. Imports increased by 3.5 percent which was the strongest monthly rise since June 2014 and also much stronger than a predicted increase of only 0.2 percent.

2. The Federal Reserve should consider trimming its $4.5 trillion balance sheet to help raise interest rates more quickly and reduce the negative impact on the economy of a stronger dollar, Eric Rosengren, president of the Boston Fed, said on Monday. "There are some benefits to actually tightening not just on short rates but also possibly on long rates," Rosengren told Reuters in an interview, following a speech at the Connecticut Business and Industry Association in which he called for faster interest-rate hikes.

3. Recovery from the economic crisis is "largely done," and officials should now turn to addressing longer-term issues like how to boost productivity, Atlanta Federal Reserve bank president Dennis Lockhart said on Monday. Lockhart said he felt the economy was entering a "transitional" phase, largely healed from the crisis but in need of fresh policies that could encourage investment, improve productivity, and counter the demographic drag of an aging population.

4. Investor sentiment in the euro zone improved in January to its highest level since August 2015 on expectations that Republican Donald Trump's election to the U.S. presidency will give a boost to an economic pick-up in the region. The Frankfurt-based Sentix research group said on Monday its euro zone index rose to 18.2 points from 10.0 points in December. The January reading surpassed the consensus forecast for 12.5 in a Reuters poll of analysts. Sentix said investors viewed the euro zone's current conditions particularly favorably, with a sub-index rising to 16.5 – its highest reading since July 2011 – from 8.3 in December.

5. A clean break with the EU's single market is not inevitable, British Prime Minister Theresa May said on Monday, seeking to clarify comments that pushed down the pound on the possibility of a hard Brexit from the European Union. May, under pressure to offer more detail on her strategy before launching divorce talks with the European Union, said on Sunday in a televised interview that Britain would not be able to keep "bits" of its membership.

II. Market Overview
FX
The U.S. dollar slumped against the safe-haven yen on Monday on investors' reduced appetite for risk, while sterling sank to more than two-month lows on talk that Britain would drastically rework trade ties with the European Union after Brexit. A fall in U.S. Treasury yields and stocks drove the dollar down as much as 0.8 percent against the yen to a session low of 115.97 yen. Against the dollar, sterling was last down 1 percent at $1.2161, while the euro was up 0.4 percent against the dollar at $1.0567. The dollar was down 0.3 percent against the franc at 1.0148 francs.

Precious Metals
Gold rose to a five-week high on Monday as markets reassessed the outlook for the U.S. economy after Donald Trump is inaugurated as president later this month, taking support from the falling dollar and lower U.S. Treasury yields. Spot gold was up 0.72 percent at $1,181.16 an ounce after touching $1,185.80, the highest since Dec. 5. U.S. gold futures for February delivery settled up 1 percent at $1,184.90.

Commodities
1.Crude Oil
Oil prices tumbled by 4 percent on Monday on concern that record Iraqi crude exports and rising U.S. output would undermine OPEC's efforts to curb global oversupply. U.S. crude futures settled down $2.03 at $51.96 a barrel, while Brent futures settled down $2.16 at $54.94 a barrel.

2. Base Metals
Zinc rose to its highest level in three weeks on Monday as the dollar fell and on expectations of a continued shortage in supply for the metal used to galvanise steel. The metal on the LME ended 1.8 percent higher to $2,667 per ounce, a level last seen on Dec. 19. Among other metals, copper closed flat at $5,591 per tonne. Aluminium rose 0.8 percent at $1,727 a tonne.

U.S. Treasuries
U.S. Treasury yields fall on Monday as nervousness about the Chinese yuan and Britain's exit from the European Union rekindle safe haven demand for low-risk government bonds ahead of this week's $56 billion supply. The yield on the benchmark 10-year Treasuries was down 3 basis points at 2.385 percent, while the 30-year bond yield was 3 basis points lower at 2.975 percent.

Stock Market
1. U.S. Equities
Declines in energy and financial stocks weighed on the S&P 500 on Monday and helped stall the Dow's pursuit of the 20,000 milestone ahead of earnings season and expected U.S. policy changes under the Donald Trump presidency. The Nasdaq notched a record high close, extending its bullish run with help from healthcare stocks. The Dow Jones Industrial Average was down 76.42 points, or 0.38 percent, to 19,887.38, the S&P 500 had lost 8.08 points, or 0.35 percent, to 2,268.9 and the Nasdaq Composite had added 10.76 points, or 0.19 percent, to 5,531.82.

2. Hong Kong Equities
Hong Kong stocks edged higher on Monday, led by utility and services stocks, but gains were capped by increasing pressure from profit-taking after a two-week long rally. The benchmark Hang Seng index rose for the third straight day, up 0.3 percent, to 22,558.69 points, after last week having the strongest weekly gains in three months. The Hong Kong China Enterprises Index lost 0.1 percent on Monday, to 9,602.32 points.