I. Yesterday’s News
International News

1.U.S. private employers stepped up hiring in December and planned layoffs by American-based companies fell sharply, pointing to sustained labor market strength that likely keeps the Federal Reserve on course to increase interest rates in March. The ADP Research Institute said private payrolls increased by 250,000 jobs in December, the biggest gain since March, and well above economists' expectations for a rise of 190,000. Other data on Thursday showed a third straight weekly rise in first-time applications for unemployment benefits, though that probably reflected volatility around the end-of-year holidays. In a separate report, global outplacement consultancy Challenger, Gray & Christmas said U.S.-based employers announced 32,423 job cuts in December, a 7.4 percent decrease from November. That brought the total number of layoffs in 2017 to 418,770, the fewest since 1990.

2. The euro zone economy closed out the year with the strongest growth in nearly seven years, driven by accelerating services and manufacturing activity across all major economies, a survey showed on Thursday. IHS Markit's Final Composite Purchasing Managers' Index rose to 58.1 in December from 57.5 in November and up slightly from the flash estimate of 58.0. It is now at its highest since February 2011 and well above the 50 mark that separates growth from contraction. Based on forward-looking indicators within the PMI release, the momentum is set to continue. The composite new orders index climbed to 58.0 last month - its highest since July 2007 - from 57.3.

3. The U.S. tax legislation approved last year is likely to boost growth and investment and is already pushing up equity prices, but should not force the Federal Reserve to raise interest rates any faster than expected, St. Louis Fed President James Bullard said on Thursday. "A lot of good things were done in this tax bill," said Bullard, who endorsed the alignment of U.S. corporate taxes closer to developed world norms. "I do hold out the possibility that the tax bill will unleash a lot of investment in the U.S. and you will then get an outsized effect." Bullard said his "base case" was for only a modest increase in capital spending, and a possible shift in the economy's long-term potential growth by a few tenths of a percentage point -- not a dramatic change for the near term but important over the long run.

4. Samsung Electronics Co Ltd is expected on Tuesday to forecast a record quarterly profit in the fourth quarter, as a world hungry for processing power and high-tech smartphones snaps up its semiconductors and screens. While a stronger won and falling NAND chip prices could take some shine off the performance, most analysts are tipping a strong quarter for the world's leading maker of semiconductors, smartphones and televisions. The South Korean technology giant is expected to forecast a 74 percent year-on-year jump in operating profit in the October-December period to 16 trillion won ($15 billion), according to a Thomson Reuters survey of 16 analysts. Samsung Electronics shares closed at 2.554 million won on Thursday, a 11 percent drop from its all-time high of 2.876 million won in early November.

Domestic News

5. China will keep its target for economic growth at "around 6.5 percent" in 2018, unchanged from last year, policy sources told Reuters, as it seeks to balance efforts to reduce debt risks while keeping the world's second-largest economy stable. The proposed target, to be unveiled at the annual parliament meeting in March, was endorsed by top leaders at the closed-door Central Economic Work Conference in Dec. 18-20, according to four sources with knowledge of the meeting outcome. "The economic growth target will still be around 6.5 percent as they favour stability," said one source who requested anonymity due to the sensitivity of the matter. China's State Council Information Office, the government's public relations arm, had not yet responded to Reuters' request for comment on the economic targets for this year.

6. Activity in China's service sector expanded at a faster pace in December, a private gauge showed Thursday, the latest indication of strength in the sector. The Caixin China services purchasing managers' index rose sharply to 53.9 in December, the highest since August 2014. Driven by strong readings in both the services and manufacturing sectors, China wrapped up 2017 smoothly, and will maintain resilient economic fundamentals in the new year.

7. Looking forward, in 2018, China needs to prevent big risks, while maintaining high-quality growth. As the economy continues to be dogged by “grey rhino” threats and “black swans”, China reiterated that it will pursue "prudent and neutral" monetary policy, meaning that monetary policy should not be loosened. Macro leverage ratio is expected to be a key indicator that determines loose or tight monetary policy.

8. The National Development and Reform Commission (NDRC) approved a feasibility study on a railway project linking Nanchang in eastern China's Jiangxi Province and Huangshan in Anhui Province, with a total investment of 48.57 billion yuan, including 45.69 billion yuan on project investment and 2.88 billion yuan on train purchasing.

II. Market Overview
FX
1. Global Market

The dollar fell on Thursday, failing to hold the previous session's gains on the back of upbeat U.S. data and minutes from the Federal Reserve, as the euro resumed a rally that has taken it close to its highest levels in three years. A stronger-than-expected U.S. private-sector jobs report briefly helped the dollar pare losses versus the euro and extend gains against the yen. But those moves were short lived. The dollar rose against the yen, however, trading up 0.2 percent at 112.78 yen on strong risk appetite across markets. After dipping in early trade in Asia, reaching as low as $1.2005, the euro bounced back to trade as high as $1.2089. The euro last changed hands at $1.2068, up 0.5 percent.

2. Home Market

China's yuan edged down against the dollar in the morning session on Thursday, following the lower official midpoint rates that bounced off a 20-month high. Upbeat U.S. economic data and minutes from the Federal Reserve drove the dollar index up, boosting demand for forex buying and sending yuan back to around 6.50. Yuan is expected to remain rangebound in the near term.

Precious Metals

Gold steadied around a 3-1/2-month high on Thursday as prospects for further U.S. interest rate increases put the brakes on a recent rally, while palladium touched record highs on tight supplies. Spot gold rose to $1,322.90 an ounce from $1,312.76 an ounce, while U.S. gold futures for February delivery settled up $3.10, or 0.24 percent, at $1,321.6 per ounce. Palladium rose 1.2 percent to $1,095.24 an ounce, earlier hitting a record high of $1,105.70.

Commodities
1.Crude Oil

Oil rose on Thursday to its highest since May 2015, on concern about supply risks due to unrest in Iran and another decline in U.S. inventories as refining activity hit a 12-year high. Brent crude, the international benchmark, settled up 23 cents at $68.07 a barrel after hitting a high of $68.27 earlier in the session. U.S. crude settled up 38 cents at $62.01, after earlier hitting $62.21, its highest since May 2015.

2.Base Metals

Zinc hit its highest in more than 10 years on Thursday on concerns over a market deficit, while copper rose after upbeat Chinese data supported growth expectations in the world's biggest metals consumer. Three-month zinc on the London Metal Exchange closed at $3,362 a tonne, up 1.1 percent, having earlier touched its highest since August 2007 at $3,364. Three-month copper on the London Metal Exchange was untraded at the close but was last bid at $7,188 a tonne, up 0.6 percent.

U.S. Treasuries
1. U.S. Bonds

Yields on U.S. government bonds rose modestly on Thursday, a day before the December payrolls report, which is expected to show further improvement in the jobs market, though some traders worry that wage growth may fall short of expectations. At 3:24 p.m., two-year yields were at 1.960 percent after hitting 1.976 percent earlier in the day, the highest level since October 2008. The five-year yield was 2.270 percent, down from 2.292 percent, its highest level since April 2011. Benchmark 10-year Treasury yields were 2.454 percent, down from a high of 2.485 percent on Thursday morning.

2. Chinese bonds

Yields of cash bonds in China’s interbank market rose on Thursday, while Treasury bonds pared some losses. New rules on debt trade pushed cash bonds sharply higher, while dragging T-bond yields much lower.

Stock Market
1. U.S. Equities

The Dow industrials broke above the 25,000 level for the first time on Thursday and other major indexes hit closing record highs again, propelled by strong global economic data that extended the New Year's rally for the stock market. Strong manufacturing and services sector data from the world's largest economies provided a bullish tone on Thursday, while other data showed U.S. private employers stepped up hiring in December. Friday will bring the key U.S. non-farm payrolls report. The Dow Jones Industrial Average rose 152.45 points, or 0.61 percent, to 25,075.13, the S&P 500 gained 10.93 points, or 0.40 percent, to 2,723.99 and the Nasdaq Composite added 12.38 points, or 0.18 percent, to 7,077.92. The Cboe Volatility Index closed at 9.22. The index has been flirting with record lows in recent months.

2. Hong Kong Equities

Hong Kong's benchmark stock index rose for the seventh straight session on Thursday, hitting a fresh 10-year high and pacing gains in Asian markets as solid United States and German economic data boosted sentiment. At the close of trade, the Hang Seng index was up 175.53 points or 0.57 percent at 30,736.48. The Hang Seng China Enterprises index rose 0.95 percent to 12,203.55.

3. China Equities

Chinese stocks rose to a 1-1/2-month high on Thursday, lifted by bellwether SinoPec. But a pullback is expected due to heavy selling pressure after recent gains. The Shanghai Composite Index closed up 16.60 points or 0.49 percent at 3,385.71, drawing near to the previous high of 3,430.46 hit on November 22, 2017. The trading volume of Shanghai A-shares fell to 242.9 billion yuan from 258.2 billion yuan. Hushen 300 index rose 0.42 percent to 4,128.81.