FX Monthly Report

January 2017

EUR/USD 1M EUR/USD 1Y

1.0900 1.1800
1.0800 1.1600
1.0700 1.1400
1.0600 1.1200
1.0500 1.1000
1.0400 1.0800
1.0300 1.0600
1.0200 1.0400
1.0100 1.0200
1.0000 1.0000
2 - Jan 9 - Jan 16 - Jan 23 - Jan 30- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan

MARKET ANALYSIS

Fundamental Analysis Calendar

January was marked by the appreciation of the Euro. At first, on the 3rd
1st Feb - Federal Funds Rate
January, the USA ISM Manufacturing PMI showed a better result than the
2nd Feb - ECB President Draghi Speaks
forecast leading to an appreciation of the dollar. On the following day,
Eurostat confirms that the inflation rate of the euro area in December was 3rd Feb - US Unemployment Rate
1.1%, resulting in the appreciation of the euro. On the 6 th January, the release 7th Feb - German Industrial Production m/m
of US Unemployment rate showed an actual value equal to the predicted, 8th Feb - Crude Oil Inventories
4.7%, resulting to the appreciation of US dollar. In addition, the Core Retail
14th Feb - German Prelim GDP q/q; Euro GDP q/q
Sales m/m had a worst performing than expected (0.2% against 0.3%
expected), but on the other hand the PPI m/m presented a good outcome 15th Feb - US CPI m/m
with 0.3%. On the 19th January, the ECB decided to maintain the Minimum Bid 20th Feb - Euro Consumer Confidence;
Rate at level of 0%, follow-on with a bullish movement of the euro. Moreover, 22nd Feb - German Ifo Business Climate; FOMC Meeting Minutes
the 20th January was marked by the first speech of the new President of
24th Feb - German Prelim CPI m/m
United States, where he reinforced the idea of nationalist policies, leading to
the depreciation of the dollar. In the final days of the month, the President 28th Feb - US Premil GDP q/q; US Consumer Confidence
Donald Trump stated that the era of a stronger dollar has ended, resulting in
a depreciation of the dollar.
Technical Analysis
This month had an overall uptrend. January started at 1.0515 with an appreciation of the USD until the 3 rd, then followed by a strong appreciation of the
EUR, found a resistance at 1.0603 on the 5 th. The price then bounced between the resistance and a support at 1.0502 until it finally broke the resistance
on the 11th. The upward momentum proved itself strong as price broke through the resistance area, at the same time the MACD crossed above the signal
line. As so, the price started floating between 1.0603, the new support, and 1.0712, the new resistance. That resistance was also broken on the 22 nd, in a
movement also confirmed by the MACD, and remained as a support until the 26th, when it was broken and it was followed by the SMA 5 days crossing
the SMA 20 days downwards. The 30 th was marked by a big drop and an equally large recovery that led to a strong appreciation of the EUR on the last
day of the month with the SMA 5 days crossing up through the SMA 20 days and finishing at 1.0790.

Financial Markets | fm@fepfinanceclub.org | http://www.fep.up.pt/skillsacademy/fepfinanceclub Page 1/3

 International Politics: changing times

The world is absorbed by a number of pressing issues, a stagnant global economy, a humanitarian crisis and the skulking impact of global warming. The
combination of rising inequality, growing polarization, the proliferation of "fake news" and populist candidates will pose a severe challenge to democracies
around the world, particularly those in North America and Europe that have a political calendar in 2017 quite full.

Starting in the USA, Donald Trump has been the main name in the political panorama these latest months. He has shown intentions of undoing several
political decisions made by its previous administration and reforming some economic and social assumptions that the world and USA itself have shaped
during the latest decades. Trumps Presidency was initiated on 20 th January and since then he has been bringing instability to politics and therefore to the
markets. Along with other examples, he has decided to reject Syrian refugees from crossing US borders, interrupt the US Refugee Admissions Program,
ban people from seven Muslim nations (Syria, Iran, Libya, Sudan, Iraq, Yemen and Somalia) from entering in the US, support change of US Embassy in Israe l
from Tel Aviv to Jerusalem and triple "enforcement and removal operations/agents" to ban from the US 2-3 million people with criminal sentences without
valid immigration state, as a sign of his potential unorthodox conduct on foreign policy. Trumps Administration has also decided to appease relations with
Russian President, specifically in order to collaborate in ISIS destruction. Another controversial measure is the intention to build a wall between Mexico and
the US, making Mexico pay for it (in an undetermined way yet, but at least with protectionist tariffs). It was also shown the intent of recover Keystone XL
Project (its a proposed crude oil pipeline, beginning in Alberta extending to Nebraska; this pipeline is a critical infrastructure project for the economic
strength and energy security of the United States) and Dakota Access Pipelines (it begins in the North Dakota and travels to Illinois) which were blocked
by Obama due to potential damages on environmental and cultural/historical assets. In Economic Policy, it was decided to step back the US from Trans-
Pacific Partnership and started a renegotiation of the trade agreement with Mexico and Canada. (Source: CNN)

In Europe, as well, political instability within European countries appears to be on the rise. Beginning with the Brexit cas e, since June 2016 when the EU
referendum took place and the "Leave" won, the United Kingdom is preparing to activate the 50 th article of the Treaty of Lisbon. On 13 th July, the Prime
Minister of UK has changed to Theresa May with the resign of David Cameron (both from Conservative Party). The Supreme Court was asked to judge on
the legitimacy of the government to trigger the 50th Article by itself, restraining May actions. The response was that the decision needed to go to the
Parliament of England but not of Scottish, Welsh, and Northern Ireland ones. Even so, the Parliament voted in favor of the EU-leave in respect with the
referendum result. (Source: BBC)

Netherlands goes to the polls on 15 th March, to elect all 150 members of the House of Representatives. At the moment, polls are projecting the anti-
European Party for Freedom (PVV) will win the elections (is set to win 35 of the 76 seats needed to form a coalition governme nt). However, given the
fragmentation of the Dutch political scene, the far-right party's leader, Geert Wilders, is unlikely to get a majority. Dutch Prime Minister Mark Rutte, center-
right Liberals (VVD), follows second in polls, (with just 23 seats), and he has already ruled out a coalition between VVD and the PVV. Wilders has pledged
to close the Netherlands borders, shut down mosques and leave the euro and EU if he gets into power. (Source: The Economist)

In France, there will be the Presidential Election on 23 th April 2017.

Marie Le Pen has been gaining space in the polls (as you can see in
graph 1) and can be the winner of the first round against Franois Fillon,
a right-wing political who was Prime Minister of France from 2002 to
2012. Le Pen leads National Front, a far-right party. She is anti-EU, anti-
immigrant and she is in favor of leaving NATO. Le Pen claims that
France should be integrated into the "Great Europe", i.e., including
Russia. (Source: Reuters)

In Germany, there will be the Federal Election on 24th September 2017,

and the current Chancellor Angela Merkel, Christian Democrat Graph 1: Percentage Average on 1015 Jan 2017 of votes. Source: Ipsos
(CDU), will defend her position against Martin Schulz, a Social Democrat
(SPD), current President of the European Parliament (until 10 th of February of 2017). In the latest polls, both got 41% (in direct vote), with Merkel losing 2
p.p. and Schulz gaining 5 p.p. from the last polls in September. In indirect vote, as the election will be, latest polls suggests Merkel may be losing advantage
due to its policy on refugee crisis, leading to the policy on refugee crisis may be the key topic to the voters, as concerning to integration and security
problems, which can raise anti-immigrant alternatives percentages. (Source: Reuters)

In Europe, there will be even more important elections soon, particularly Norway, Slovenia and Hungary. It should be noted that Italy and Greece are
experiencing difficult times at the political level whose future is still very uncertain. More European countries will go to the polls in 2017, anticipating political
movements of great importance.

2016 was the year where one political controversy or another was always around the corner. But 2017 promises to be just as unpredictable with international
politics been even more volatile because of an "unusually wide constellation of leaders known for their erratic behavior", as said for Ian Bremmer (political
risk researcher).

DID YOU KNOW

What an exotic currency stands for?

Exotic currency is the term given to traded currencies which are illiquid. They arent common, with lack of popularity in terms of consistent market
activity, and trade with high bid-ask spreads. It is not as easy to trade exotic currency because the market does not have the same amount of activity
for exotic currency as it does for main currencies. Exotic currency is usually from developing countries such as parts of Asi a, the Pacific, the Middle
East and Africa.

A few examples are: ARS - Argentinean Peso, BRL - Brazilian Real, CLP - Chilean Peso, CNY - Chinese Yuan Renminbi, EGP - Egyptian Pound, HKD -
Hong Kong Dollar, HUF - Hungarian Forint, INR - Indian Rupee, ISK - Icelandic Krona, KRW - South Korean Won, MXN - Mexican Peso, PLN - Polish
Zloty, RUB - Russian Ruble, SGD - Singaporean Dollar, TRY - New Turkish Lira, ZAR - South African Rand and ZWD - Zimbabwe Dollar.

Financial Markets | fm@fepfinanceclub.org | http://www.fep.up.pt/skillsacademy/fepfinanceclub Page 2/3

 Contacts FEP Finance Club FX Team

Franklin Carneiro da Silva Joana Silva

Director of Financial Markets Analyst & Trader, Head of FX

Alexandre Silva Bruno Veiga Gonalo Santos Nuno Teixeira

Analyst & Trader Analyst & Trader Analyst & Trader Analyst & Trader

IMPORTANT NOTICE and DISCLAIMER:

This publication has been prepared by FEP Finance Club for informational and marketing purposes only. Opinions, estimates and projections contained
herein are our own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled
or arrived at from sources believed reliable, but no representation or warranty, express or implied, is made as to their accuracy or completeness and
neither the information nor the forecast shall be taken as a representation for which FEP Finance Club, its affiliates or any of their employees incur
any responsibility. Neither FEP Finance Club nor its affiliates accept any liability whatsoever for any loss arising from any use of this information. This
publication is not, and is not constructed as, an offer to sell or solicitation of any offer to buy any of the currencies referred to herein, nor shall this
publication be construed as an opinion as to whether you should enter into any swap or trading strategy involving a swap or any other transaction.
The general transaction, financial, educational and market information contained herein is not intended to be, and does not constitute, a
recommendation of a swap or trading strategy involving a swap within the meaning of U.S. Commodity Futures Trading Commission Regulation 23.434
and Appendix A thereto. This material is not intended to be individually tailored to your needs or characteristics and should not be viewed as a call
to action or suggestion that you enter into a swap or trading strategy involving a swap or any other transaction. You should note that the manner in
which you implement any of the strategies set out in this publication may expose you to significant risk and you should carefully consider your ability
to bear such risks through consultation with your own independent financial, legal, accounting, tax and other professional advisors. This publication
and all information, opinions and conclusions contained in it are protected by copyright. This may not be reproduced in whole or in part, or referred
to in any manner whatsoever nor may the information, opinions and conclusions contained in it be referred to without the prior express written
consent of FEP Finance Club

MARKETANALYSIS

Page 3/3
Financial Markets | fm@fepfinanceclub.org | http://www.fep.up.pt/skillsacademy/fepfinanceclub