I. Yesterday's News
International News
1. US consumer confidence surged to a more than 16-year high in March amid growing labor market optimism. The goods trade deficit narrowed sharply in February, indicating the economy was regaining momentum after faltering at the start of the year. The economy's strengthening fundamentals were underscored by other data on Tuesday showing further increases in house prices in January. Robust consumer confidence and rising household wealth from the home price gains suggest a recent slowdown in consumer spending, which has hurt growth, is likely temporary. The dollar rose against a basket of currencies, while prices for US government bonds fell slightly. Stocks on Wall Street were trading higher, with financial and energy stocks surging.

2. Fed Vice Chairman Stanley Fischer said two more increases of U.S. overnight interest rates this year seemed "about right" during a television interview. Dallas Federal Reserve President Robert Kaplan wants a "gradual and patient" approach to raising interest rates this year, saying the U.S. central bank should be careful not to jolt the economy with aggressive rates hikes. Kansas City Federal Reserve President Esther George said she needs to see more details on the Trump administration's fiscal proposals before factoring them into her economic forecasts, and she did not want to see an acceleration in interest rate hike to hit U.S. economy. Fed Governor Jerome Powell said on Tuesday, "The scope, the timing and the contents of fiscal policy remain pretty uncertain, and we are just going to have to wait and see." Powell said the U.S. central bank's balance sheet shall be cut in a gradual and predictable way within a period of time when time is right.

3. Bank of England interest rate-setter Ian McCafferty highlighted a weak outlook for the economy on Tuesday and said he did not know if he would vote to increase borrowing costs at the next meeting of the BoE's policymakers in May. Asked if the economy was strong enough now, he replied: "I think the economy is strengthening slightly over the course of last year and into the early part of this year. Whether it stays as strong is still very much an open question, because we are seeing inflation starting to pick up." McCafferty said he expected higher inflation to crimp consumer spending and lead to "anaemic" economic growth.

4. Iranian Oil Minister Bijan Zanganeh told reporters in Moscow that a global deal is likely to be extended, but time was needed to discuss the subject thoroughly. "It seems that most of the OPEC and non-OPEC (countries) are going to extend the agreement, but time is needed to evaluate the situation and to have face-to-face meetings and discussions with others," Zanganeh said.

5. Britain's departure from the European Union will significantly hurt German firms' business with the country and investment will decline strongly in the long term, Germany's DIHK Chambers of Commerce said on Tuesday. "We should expect further declines in trade in the coming months," DIHK President Eric Schweitzer said. Almost one in 10 companies are already planning to withdraw investment from Britain and put it elsewhere even though the terms of Britain's departure are not yet known, he said.

6. The top six of South Africa's ruling African National Congress party have approved the removal of Finance Minister Pravin Gordhan, ANN7 television reported on Tuesday, citing sources. ANC Secretary-General Gwede Mantashe, one of the ANC's top six, told Reuters he could not comment on the report. South Africa's Pravin Gordhan said he was still the finance minister in response to a question as he attended a court hearing on Tuesday on a case he has brought against the Gupta brothers, a Reuters witness said. South Africa Rand extended losses after the news.

Domestic News
7. China will cut the retail prices of both gas and diesel by 230 yuan ($33.4) per ton and 220 yuan per ton respectively from Wednesday due to price declines in the international market, the country's top economic planner said Tuesday. China has a pricing regime that adjusts domestic retail oil prices when international crude prices change, according to the National Development and Reform Commission (NDRC).

8. The Ministry of Land and Resources said, China will improve work to offset cultivated land used for other purposes, stressing local government and party committee's priority in the protection of cultivated land and the importance of strengthening evaluation and incentive mechanisms.

9. U.S.-China trade is win-win game that could bring about sustained development, mutual benefits due to the complementary features of the two countries, People's Daily reported. Cooperation is the only right choice, and it's old protectionism that use China's trade surplus as an excuse.

II. Market Overview
FX
1. Global Market
The dollar rose on Tuesday, bouncing from 4-month lows, as a top Federal Reserve official reinforced expectations of more U.S. rate hikes to come while political uncertainties surrounding Britain's exit from the EU pressured European currencies. The dollar index was last up 0.6 percent against a basket of major currencies that measures its overall strength to 99.711, the strongest one-day percentage gain since March 1. The euro fell 0.5 percent against the dollar to $1.081. Sterling dipped 0.8 percent to $1.245. The dollar also rose 0.4 percent against the yen and gained 0.7 percent against the Swiss franc.

2. Home Market
China's yuan fell off a one-month high against the dollar on Tuesday. Buying bets for forex held at high at month-end despite of a weaker dollar and relieved depreciation pressure. Big banks continued to provided liquidity in dollar to keep spot prices in line with midpoint rates.

Precious Metals
Gold prices turned lower on Tuesday, after nearing the prior session's one-month high, as the U.S. dollar, Treasury yields and stock markets extended gains. Spot gold was down at $1,251.52 an ounce. U.S. gold futures settled down 0.01 percent at $1,255.60.

Commodities
1.Crude Oil
Oil prices rose as much as 2 percent on Tuesday after a severe disruption to Libyan oil supplies and as officials suggested OPEC and other producing countries could extend an output-cuts deal to the end of the year. Brent crude rose 58 cents, or 1.14 percent to settle at $51.33 per barrel. West Texas Intermediate (WTI) crude ended the session 64 cents, or 1.34 percent higher at$48.37 a barrel.

2.Base Metals
Copper rose on Tuesday after hitting a two-week low in the previous session as hopes that U.S. President Donald Trump would shift focus away from failed healthcare reform to economic stimulus lifted stocks and the dollar. Three-month copper on the London Metal Exchange closed up 2 percent at $5,873 a tonne.

U.S. Treasuries
1. U.S. bonds
U.S. Treasury debt yields rose on Tuesday, in generally below-average volume, tracking a jump in stocks after U.S. consumer confidence surged to a 16-year high. In afternoon trading, benchmark 10-year notes were down 11/32 in price to yield 2.416 percent, up from 2.375 percent on Monday.

2. Chinese bonds
China's interbank money rates were little changed in the morning session with the CFFE bonds trading in a tight range. We still maintained a bullish view on short-term liquidity. The IRS dropped by 4-5 bps. New CDB debts is due for payment the next month. Overall demand is quite strong.

Stock Market
1. U.S. Equities
U.S. stocks ended sharply higher on Tuesday, with financial and energy shares surging as data showed U.S. consumer confidence soaring to a more than 16-year high. The Dow Jones Industrial Average rose 150.52 points, or 0.73 percent, to 20,701.5, the S&P 500 gained 16.98 points, or 0.73 percent, to 2,358.57 and the Nasdaq Composite added 34.77 points, or 0.6 percent, to 5,875.14.

2. Hong Kong Equities
Hong Kong stocks followed Asian markets higher on Tuesday on cautious hopes that U.S. President Donald Trump would be able to pass his planned economic stimulus policies despite last week's defeat on healthcare reform. The Hang Seng index rose 0.6 percent to 24,345.87 points, while the China Enterprises Index also gained 0.6 percent to 10,425.89, shrugging off weakness in mainland China markets.

3. China Equities
China stocks closed in the negative territory for the second consecutive day amid a cautious sentiment as investors felt at loss on fast rotation of hot themes. Major indexes continued to consolidate in tight range with trading volume further shrinking. The Shanghai Composite Index closed down 14.1 points or 0.43 percent to 3,252.95, trading within a tight range of only 19 points. The trading volume of Shanghai A shares tumbled nearly 20 percent to RMB 203.3 billion from RMB 248.9 billion.