Market and Policy Dislocations Could Peak in Q1 of 2015, Warns Saxo Bank

Hellerup, Denmark (ots/PRNewswire) -

The world is drastically out of synch both in terms of economic
and monetary policy going into 2015 and faces an unprecedented
cocktail of geopolitical risks. Expect markets to reach the point of
maximum dislocation as early as Q1 of 2015.

Saxo Bank, the online multi-asset trading and investment
specialist, has published its quarterly outlook for the global
markets and its key trading ideas for 2015.

The global economy and policy mix is about as out-of-synch as it
has ever been and we are faced with major geopolitical risks that
could deepen with the advent of sub-60 dollar oil prices, according
to Saxo Bank's latest outlook. Inflation is at multi-decade lows even
as monetary policy is extremely loose in most of the developed
economies and tight in emerging economies, with the US Federal
Reserve the lone developed economy central bank expected to begin a
tightening cycle soon - likely around mid-year. Meanwhile, credit
spreads trade below default rates and yields and volatility is still
near historic lows.

Balancing the global economy in 2015 will require countering the
slowdown in emerging markets, combatting deflation and confronting
rising debt to GDP ratios. Steen Jakobsen, Saxo Bank's Chief
Economist, says that eventually "the path of least resistance in 2015
is a lower dollar, stable to slightly higher energy prices and
unchanged interest rates." Though the point of maximum dislocation,
based on an extension of the trends we saw building in 2014, will be
seen in the first quarter, as the ECB risks making a terrible
decision by hitching its wagon to a new QE programme.

Currency markets will see considerable volatility in 2015. The
most likely trend is not so much a stronger US dollar but a weaker
dollar although Saxo Bank expects the greenback will continue to
strengthen in Q1 with the prospects of currency wars emerging,
particularly in Asia. Saxo Bank's key FX trade recommendations for Q1
2015 are to go long USD/CHF to position for possible punitive
negative rates from the Swiss National Bank in March. We're also
looking at selling the Chinese yuan versus the US dollar and
eventually against the Japanese yen to position for a possible
Chinese currency devaluation which could see China exporting
deflation to the rest of the world.

Saxo Bank expects the global economy to grow by 3% in 2015,
compared to 2.2% in 2014, driven by low energy prices, less austerity
in advanced economies and higher trade growth, with the major
downside risk to global growth in 2015 coming from geopolitical
tensions. More specifically:

- The US economy will continue to grow at a robust pace driven by
consumption and lower energy prices. Saxo Bank expects the US economy to grow around
3% in 2015.
- Outlook for the euro area remains challenging, with structural reforms
remaining sporadic while the private sector continues to pursue deleveraging,
suppressing both growth and inflation. Saxo Bank expects the euro area economy to grow
by 1% in 2015.
- The UK economy will grow by 2.5% in 2015, driven by strong private sector
growth and supportive government policies, with the main downside being a material
slowdown in the housing sector.
- Saxo Bank remains sceptical of the impact on the real economy of China's
central bank efforts to arrest the decline in growth through easing policies. The
bank's forecast for Chinese growth in 2015 is a below consensus 6.7%.

Despite the relatively low growth rate in the eurozone in 2015,
Saxo Bank predicts that Club Med and Eastern European member
countries will lead growth in 2015, as comparative gains enjoyed by
the likes of Germany come to an end and low unit labour costs in the
periphery drive growth.

"The upshot of this is that Europe's economy will finally
transform itself to one fuelled by small, innovative and agile
companies. This is excellent news for Europe's future." adds
Jakobsen.

FX

Saxo Bank predicts that Q1 could see the US dollar strengthen
further, but warns to expect an uneven path as leveraged traders are
already heavily long on US dollar and significant risks to that view
as the year wears on if asset markets destabilize on the anticipated
withdrawal of Fed liquidity. Further afield, economic and political
tensions between China and Japan over Japan's radical monetary policy
and JPY weakening could lead to a fresh Asian currency war.

Equities

Saxo Bank expects Spanish equities to outperform global equity
markets in Q1 2015, boosted by the inevitable easing policies pursued
by the European Central Bank, as inflation runs low and economic
growth is slow. On the other hand, the Chinese equity market remains
overheated and is due for a correction, while the oil and energy
slump will cast a long shadow over Russian equities too.

Commodities

Rising supply at a time of weak demand growth and a stronger
dollar will keep a raft of key commodities under pressure at the
beginning of 2015 with the first half most likely yielding the lowest
prices. In oil markets Saxo Bank expects Brent crude to average
$62/bbl during the first quarter. A stronger dollar remains the key
risk to precious metals while higher US interest rates are already
priced in. This leaves positive drivers for commodities such as
geo-politics under-priced and with this in mind, the first quarter
could see a low point for gold.

To access the full list of trade ideas produced by Saxo Bank
analysts which accompany the 2015 outlook, please click here:
https://www.tradingfloor.com/publications/essential-trades

About Saxo Bank

Saxo Bank is an online multi-asset trading [http://www.saxobank.c
om/forex?csref=b1744_Link_boilerplate_pressrelease ] and investment
specialist, offering private investors and institutional clients a
complete set of tools for their trading and investment strategies.
Its financial community portal, TradingFloor.com
[https://www.tradingfloor.com ], is the first multi-asset social
trading platform. A fully licensed bank in Europe under supervision
of Danish FSA, Saxo Bank enables clients to trade FX, CFDs, ETFs,
Stocks, Futures, Options and other derivatives on our award-winning
SaxoTrader platform, accessible on PC
[http://www.saxobank.com/trading-platforms/saxotrader ]s, tablet
[http://www.saxobank.com/trading-platforms/saxowebtrader ]s or
smartphone
[http://www.saxobank.com/trading-platforms/saxotrader-apps ]s through
a single account and available in more than 20 languages. The
platform is white-labelled by more than 100 major financial
institutions worldwide. Saxo Bank also offers professional portfolio
and fund management as well as traditional banking services through
Saxo Privatbank. Founded in 1992, Saxo Bank is headquartered in
Copenhagen and has offices in 26 countries throughout Europe, Asia,
the Middle East, Latin America, Africa and Australia.

ots Originaltext: Saxo Bank (Switzerland) SA
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Kasper Elbjørn, Head of International Communications,
+45-3065-4300, press@saxobank.com