I. Yesterday's News
1. Federal Reserve officials cautioned on Thursday that the fiscal and tax plans sketched out by the incoming Trump administration could trade a short-term economic boost for longer-run inflation and debt problems they might have to counteract. Fed regional bank presidents, in an array of appearances, agreed in principle that the policies President-elect Donald Trump is likely to pursue will increase economic growth - through direct spending, the consumption and investment spurred by tax cuts, and the boost to business from lighter regulation. In a recent survey of businesses in the southeast, said Atlanta Federal Reserve President Dennis Lockhart, executives expressed "optimism around the prospect of fiscal stimulus, tax reduction, spending on infrastructure and some amount of deregulation." But at this point the economy does not really need much short-term help, said Chicago Federal Reserve President Charles Evans. It needs longer term strategies to expand a labor force constrained by issues like population aging and lagging productivity. Philadelphia Federal Reserve Bank president Patrick Harker said that U.S. economy was "robust" enough to support three interest rate hike this year. With the economy “displaying considerable strength" and inflation “on course” to meet the Fed's 2 percent target, Harker said he see three rate hikes as being appropriate in 2017, if the economy stays on track.

2. Opponents of the European Central Bank's money-printing programme openly voiced their dissent at the ECB's latest meeting. In a rare sign of open opposition, the minutes of the Dec. 8 meeting of the ECB's Governing Council showed that "a few members" rejected both proposals on the table to continue purchases beyond March. With euro zone inflation rebounding due to rising oil prices, the ECB is facing calls, particularly in Germany, to pare back of its bond-buying scheme. After the minutes, U.S. Stocks fell and treasury yields firmed, while the dollar slipped against a basket of currencies. The European Central Bank should start unwinding its ultra-loose monetary policy this year, German Finance Minister Wolfgang Schaeuble said in an interview to be published on Friday, adding that it would not be easy. Schaeuble added it was "possible and necessary" for the next government to lower taxes after Germany's general election in September.

3. China's new yuan loans increased far more than expected in December lifted by a recovery in household loans and corporate medium-to-long-term loan. Both yuan loans and non-standard financing were at highs despite of lower debt financing due to market moves at year-end last year. Expanding balance sheet and off-balance-sheet boosted social financing to highs. Central bank data showed on Thursday, Chinese banks extended 1.04 trillion yuan in net new yuan loans in December, well above 700 billion yuan projected by analysts polled by Reuters. Chinese banks extended a record 12.56 trillion yuan of loans in 2016, 925.7 billion higher than 2015. Broad M2 money supply (M2) grew 11.3 percent from a year earlier, missing Reuters' forecasts of 11.5 percent. Corporate financing recovered as real economy steadied, new credit would stay at highs in early 2017 after household loans stagnated amid government regulation on real estate.

4. Initial claims for state unemployment benefits increased 10,000 to a seasonally adjusted 247,000 for the week ended Jan. 7, the Labor Department said. It was the 97th straight week that jobless claims remained below 300,000, a threshold associated with a healthy labor market. That is the longest stretch since 1970. The number of Americans filing for unemployment benefits rose less than expected last week, pointing to a tightening labor market that is starting to spur faster wage growth. Other data on Thursday showed import prices posting their largest gain in nearly five years in the 12 months through December, suggesting that inflation could soon push higher. Import prices are being driven by rising oil prices, but a strong dollar could limit some of the impact on inflation. U.S. financial markets were little moved by the data amid disappointment over the lack of details regarding president-elect Donald Trump's economic policy on Wednesday during his first press conference since his Nov. 8 election victory. The U.S. government posted a $28 billion budget deficit in December, with both receipts and outlays falling from the same month a year earlier, the Treasury Department said on Thursday. Analysts polled by Reuters had expected a $25 billion deficit for last month.

5. Saudi Arabia has cut oil output to its lowest in almost two years, its energy minister said on Thursday. Energy Minister Khalid al-Falih said output had fallen below 10 million barrels per day - more than it had promised as part of a global output cut deal between OPEC and non-OPEC producers. Falih also said he expected the oil market to tighten in two to three years, aided by the agreement of OPEC and non-OPEC producers late last year to curb production. Several OPEC members, including Iraq and Kuwait, said they were implementing the deal and OPEC Secretary-General Mohammed Barkindo said the group expects global oil inventories to fall by the second quarter. Separately, Russia's Energy Minister Alexander Novak said the country was starting to implement its own planned cuts, in conjunction with an agreement among non-OPEC producers.

6. The U.S. Environmental Protection Agency on Thursday accused Fiat Chrysler Automobiles NV of illegally using hidden software in 104,000 U.S. diesel vehicles to allow excess diesel emissions to go undetected. After the news, the company's shares plunged 12.6 percent in New York and closed down 16.14 percent in Italy. Fiat Chrysler Chief Executive Sergio Marchionne angrily rejected the allegations at a hastily-assembled conference call with reporters. Italy's Transport Ministry said on Thursday that the car models that the U.S. Environmental Protection Agency (EPA) says used a software that allowed excess diesel emissions to go undetected are not road tested or sold in Italy.

II. Market Overview
FX
The U.S. dollar hit its lowest level in five weeks against a basket of currencies on Thursday and was on course for its worst week since November, hit by a loss of confidence in the U.S. reflation trade a day after a news conference by U.S. President-elect Donald Trump. The index pared losses in afternoon trading and was last down just 0.4 percent at 101.370. The index is on track to fall 0.9 percent this week to mark its worst week since that ended Nov. 4. The dollar weakened as much as 1.4 percent against the yen to 113.76 yen, its weakest level in five weeks, while the euro hit its highest in five weeks against the dollar of $1.0684 . Sterling hit a six-day high against the dollar of $1.2317. The dollar was last down 0.3 percent against the peso at 21.7870 pesos.

Precious Metals
Gold surged above $1,200 an ounce to its highest in seven weeks on Thursday as the dollar fell after U.S. President-elect Donald Trump's long-awaited news conference gave few details on economic policy. Spot gold was up 0.34 percent at $1,195.56 an ounce, after touching $1,206.98, its loftiest since Nov. 23. U.S. gold futures settled up 0.3 percent at $1,199.80 per ounce.

Commodities
1.Crude Oil
Oil prices rose more than 1 percent on Thursday on news that key crude exporters, including Saudi Arabia and Russia, were cutting production to reduce a global crude glut, and on forecasts of record demand in China. U.S. crude futures settled up 76 cents to $53.01 a barrel, a gain of 1.5 percent. Brent crude oil settled up 91 cents, or 1.7 percent, at $56.01.

2. Base Metals
Copper hit a one-month high on Thursday, leading gains across most base metals as the dollar weakened on U.S. president-elect Donald Trump's failure to give clear policy details at his first news conference since November. Three-month copper on the London Metal Exchange closed up 2.2 percent at $5,842 a tonne. Nickel closed up 0.9 percent at $10,275 a tonne, having earlier fallen 5 percent to $9,660 after Indonesia said it would ease a ban on ore exports, allowing exports of nickel ore and bauxite.

U.S. Treasuries
A weak $12 billion 30-year bond auction cooled a rally in the U.S. Treasuries market on Thursday, lifting bond yields from their initial lows as traders reduced their bets on inflation and federal borrowing under a Trump administration. The yield on benchmark 10-year Treasury notes was 2.356 percent, down 1 basis point from late Wednesday. Earlier it fell below its 50-day moving average, a bullish technical signal, for the first time since late September, according to Reuters data. The 30-year bond yield was little changed on the day at 2.956 percent after touching 2.902 percent, the lowest in two months.

Stock Market
1. U.S. Equities
The three major U.S. stock indexes closed lower on Thursday as investors waited for fourth-quarter corporate earnings and details of U.S. President-elect Donald Trump's economic policy eight days ahead of his inauguration. The Dow Jones Industrial Average fell 63.28 points, or 0.32 percent, to close at 19,891, the S&P 500 dropped 4.88 points, or 0.21 percent, to 2,270.44 and the Nasdaq Composite dipped 16.16 points, or 0.29 percent, to 5,547.49.

2. Hong Kong Equities
Hong Kong stocks fell, bucking a regional rally, as investors took a breather after five days of gains in the city. The benchmark Hang Seng index was down 0.5 percent, at 22,829.02 points, while the Hong Kong China Enterprises Index lost 0.1 percent, to 9,723.05 points.