I. Yesterday's News
1. The election of Donald Trump as U.S. president has done nothing to change the Federal Reserve's plans for a rate increase "relatively soon," Fed Chair Janet Yellen said on Thursday in Congressional testimony that included a pledge to serve out her term. Yellen said the U.S. central bank would change its outlook as necessary as the new administration rolls out plans for perhaps hundreds of billions of dollars in tax cuts and additional government spending. She also suggested the new government keep in mind that the United States is near full employment and inflation may be rising. For the time being, Yellen said, incoming economic data justified a rate hike "relatively soon" and, absent any dramatic changes, a gradual pace of hikes after that.

2. U.S. consumer prices recorded their biggest increase in six months in October on rising gasoline costs and rents, suggesting a pickup in inflation that potentially clears the way for the Federal Reserve to raise interest rates in December. Prospects for a rate hike next month also got a boost from other data on Thursday showing first-time applications for unemployment benefits tumbling to a 43-year low last week and housing starts surging to a nine-year high in October. The reports painted an upbeat picture of the economy early in the fourth quarter. The Labor Department said its Consumer Price Index the CPI advanced 1.6 percent in the 12 months through October, the biggest year-on-year increase since October 2014.

3. European Central Bank rate setters meeting last month agreed on the need to maintain unprecedented monetary stimulus and to decide in December whether to extend the ECB's 1.74 trillion euro asset buys, minutes of the meeting showed on Thursday. Core inflation still lacks a convincing upward trend and wage growth has been unexpectedly subdued, but the euro zone economy is developing along the path seen earlier so it was premature to make a call either way, minutes of the Oct 20 meeting showed, repeating policymakers widely discussed view.

4. The Bank of Japan on Thursday fired a warning shot to markets by offering to buy unlimited bonds for the first time under a revamped policy framework, as domestic debt yields surged in the wake of Donald Trump's upset U.S. election victory. The BOJ's bond-buy offer attracted no bids as market players can sell them at a lower yield, or a higher price, in the market. Moves in Treasuries do have an impact on Japanese bond yields. Ten-year JGB futures rose as much as 0.40 point following the BOJ's operation, the biggest gain since the BOJ started the "yield curve control" policy. The yen pared losses against the dollar, and rose in the positive territory at one point.

5. Australia's jobless rate holds at 3-year low in October, while employment only mildly recovered after sharp decline in September. The mixed report basically kept the outlook for a steadied interest rates unchanged. Australia's employment rose by 9,800 in October in seasonally adjusted terms, missing expectations for an increase of 20,000, data released by the Australian Bureau of Statistics showed Thursday. Analysts said investors shall not over-interpret a month's data as the result can be affected by sampling. The Australia dollar were little changed against the U.S. dollar in a quiet market. Inter-bank interest rate futures showed a 20 percent chance of the RBA cutting interest rate next year. Investors are even considering the likelihood that the central bank may raise interest rates at some point in 2018.

II. Market Overview
FX
The dollar rose to a 13-1/2-year high against a basket of currencies on Thursday as the bond market resumed its sell-off on growing certainty of a U.S. interest rate increase in December and signs of solid U.S. economic growth. The dollar index, which measures the greenback against six major currencies, was up 0.5 percent at 100.94 after hitting a 13-1/2-year high at 100.96. The euro ended near an 11-1/2-month low against the dollar at $1.0620, down 0.6 percent on the day. The dollar was up 0.8 percent at 109.94 yen after hitting its strongest level against the yen since early June.

Precious Metals
Gold fell to a 5-1/2-month low on Thursday, giving up earlier gains as the dollar index tapped a 13-1/2-year high on strong U.S. economic data and comments by U.S. Federal Reserve Chair Janet Yellen that bolstered the case for hiking interest rates next month. Spot gold was down at $1,216 an ounce. U.S. gold futures settled down 0.6 percent at $1,216.90 per ounce.

Commodities
1.Crude Oil
Oil prices settled slightly lower on Thursday, then fell as much as 1 percent in the after-market session as a stronger dollar outweighed expectations of an OPEC deal to limit production. Brent crude settled down 14 cents a barrel at $46.49, before falling further to $46.12 by 2021 GMT, down 51 cents, or 1.1 percent. U.S. West Texas Intermediate crude closed 15 cents lower at $45.42. It fell in post-settlement by 56 cents, or 1.2 percent, to $45,01.

2. Base Metals
Copper rose on Thursday in volatile trade on speculative flows and against the backdrop of falling inventories for the metal used in construction and power. Benchmark copper on the London Metal Exchange closed 1.2 percent higher at $5,495.50 per tonne. Elsewhere, zinc was down 0.4 percent to $2,514 per tonne in official trading rings. Aluminum ended 0.5 percent lower at $1,685 per tonne. Lead slipped 0.4 percent to $2,169.50 per tonne.

U.S. Treasuries
U.S. Treasury yields rose on Thursday after data suggested the U.S. labor market is tightening and inflation is beginning to gain traction, which prompted investors to sell government debt. The yield curve steepened with 10- and 30-year Treasury debt yields trading near their highest levels of this year. The 10-year note fell 16/32 in price to yield 2.281 percent. The 30-year bond fell 1-10/32 in price to yield 2.992 percent. Yields on the 2-year note hit their highest since Jan. 5, rising to 1.034 percent.

Stock Market
1. U.S. Equities
The benchmark S&P 500 index rose to within a hair of its record high on Thursday as bank stocks got a boost from bets on higher interest rates and consumer discretionary stocks were helped by economic data and earnings. The S&P 500 gained 10.18 points, or 0.47 percent, to end at 2,187.12, compared with its Aug. 15 record of 2190.15. The Dow Jones industrial average finished up 35.68 points, or 0.19 percent, at 18,903.82, and the Nasdaq Composite added 39.39 points, or 0.74 percent, to reach 5,333.97.

2. Hong Kong Equities
Hong Kong's benchmark Hang Seng Index edged lower on Thursday, with continued strength in the U.S. dollar hurting sentiment in Asia, but the decline was limited by strength in the services sector. The benchmark Hang Seng index fell 0.1 percent, to 22,262.88, while the China Enterprises Index lost 0.4 percent, to 9,326.54 points.