Overview of the market for 2017 shared on 9th Jan 2017 at LCMS Traders students quarterly gathering.

1. The Year of “Change”
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2. Risk Aware
Trading foreign exchange on margin carries a high level of risk, and may not
be suitable for all investors.
The possibility exists that you could sustain a loss of some or all of your initial
investment and therefore you should not invest money that you cannot afford
to lose.
You should be aware of all the risks associated with foreign exchange trading,
and seek advice from an independent financial advisor if you have any
doubts.
This report is provided for informational purposes only, and does not
constitute an offer or solicitation to buy or sell any securities discussed
herein.
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3. Globalisation
Deflationary
Dovish
Developed
Yield Play
Fixed Income
Protectionism
Inflationary
Hawkish
Emerging
Growth Play
Equity
2017 – The Year of Change
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4. Calendar of Events
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5. U.S. Equities and Oil
Dispersion of Asset Classes
U.S. Treasuries and U.S. Equities
Emerging market equities and commodities
Break down of traditional relationships across asset classes.
Oil and large-cap domestic equities no longer move together.
Interest rate increases, debt reduction, could bring wider volatility to prices. LCMS
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6. Source: Bloomberg
Globalisation to Protectionism
Trump indicated plans to impose 45% taxes on Chinese imports.
Studies above shows the implications this tax increase would have on
China’s economy.
Import tax of 45% could impact Chinese GDP by 1.3%.
This could be a significant factor for the global market.
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7. Deflation to Inflation
Oil prices is a major input to an economy.
Higher oil prices is likely to spur inflation, especially in the first quarter of
2017.
It is anticipated that oil prices is likely to range at the $55 per barrel mark,
with OPEC deals being the primary reason.
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8. Dovish to Hawkish
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Feds data has been presented a positive view of the economy.
With plans for increases in short and long term Interest Rates.
Hawkish Feds would be a significant signal to the market.

9. US Dollar Index (DXY)
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Key Levels to Watch: 103 & 107
Breaking of those levels
Could bring levels 115 and 120 into target

10. EUR/USD
• Normalisation of US interest rates &
Expansion of bond purchase program in EUR
• Increasing interest rate differential could lead
to capital flow towards USA.
• USD to further appreciate against EUR,
possibly to beyond of $0.95
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11. GBP/USD
• Since Brexit, economic data have boosted the
GBP to be one of the better performing
currencies against the USD.
• However, the Supreme Court’s judgment and
pending Article 50 could take the GBP lower.
• With pending political risk, GBP/USD could fall
back to the $1.20 region.
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12. USD/JPY
• A weaker Yen will stimulate the country’s
manufacturing sector.
• BoJ likely to be more cautious with regards to
over aggressive monetary policy easing.
• USD/JPY likely to trade in a wide range, with
limited upside potential.
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13. AUD/USD & NZD/USD
• Rate cut considerations from the RBA.
• Limited upside for the AUD/USD.
• NZD likely to be dragged lower by weakness in
the AUD/USD.
• Inflation expectations still subdued, RBNZ likely to
intervene to push the currency weaker.
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