Global Macro Overview Q4/2018. The Quarterly REPORT. #lcgquarterlyreport

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1 Global Macro Overview Q4/2018 The Quarterly REPORT

2 Fundamental views On this page, LCG presents a brief synopsis of its outlook for the most popular markets traded on the LCG Trader platform. The markets covered are split between indices, forex and commodities. EURUSD Political upset is rising in the Eurozone and the first real economic effect is taking shape in Italy via a higher budget deficit. With the end of QE not until December, markets are not ready to price in higher European interest rates in GBPUSD Uncertainty over a viable solution to the Irish border in a Brexit deal may keep a lid on Sterling in the fourth quarter. Ultimately, we think gradual Bank of England rate hikes and minimal Brexit fallout keep a floor under the pound. USDJPY The Bank of Japan has shifted its yield curve target higher but its policy remains very accommodative. We think dollar-yen continues to track treasury yields higher with reduced haven demand offering an additional buffer. FTSE 100 The value of the index still largely hinges on the direction of Sterling, which looks to have made a bottom. A stronger British pound coupled with capital outflows before the Brexit deadline should keep the FTSE under pressure. Dow Jones The Dow has been a laggard against other US indices thanks to multinational exposure to the US-China trade war. We expect the Dow bull run to remain intact but see the Russel 2000 and S&P 500 continuing to outperform. GOLD The Appreciation of the US dollar has hammered gold prices in We are open to the idea of a technical rebound after the sell-off but see little fundamental justification for bullishness absent a dollar rebound or a decoupling of its dollar relationship. Crude oil (Brent) Oil prices have a bullish outlook while the OPEC/Russia cartel remain committed to controlling production. Shorter term, we would anticipate a sell the news scenario once sanctions are re-introduced on Iranian oil exports in November. German DAX German corporate profits continue to rise but the threat to international trade and unusually volatile German politics has kept the Dax below the record highs reached in Q1. We think this underperformance leaves the index vulnerable to any European economic uncertainty

3 EURUSD The euro has failed at successive breakout attempts near We favour a deeper correction to target 1.09, however should price move through 1.18, the euro could target GBPUSD We think Sterling may have found a base at 1.27 but would expect another re-test before any chance of an eventual rebound to A move below 1.27 would bring into sight.

4 USDJPY We think then yen consolidates below before eventually breaking higher to A drop back below the broken declining trendline risks a move to 108. FTSE 100 The uptrend in the FTSE 100 appears to have to turned sideways and we fear another rout towards A break of 7790 would negate this view and could target 8150.

5 German DAX The Dax index is forming a head and shoulders pattern with 11,900 as the neckline and potential downside target of 10,800. Should 11,900 hold, another move to 13,540 is expected. Dow Jones Nothing so far would indicate the Dow is ending its uptrend. A move beyond 26,700 could see 28,000 while a bigger pullback could target 25,400.

6 Gold Gold is hugging a 10-year rising trendline. We expect this trendline to hold for another run towards A trendline break could target 1125 in the short term. Crude oil (Brent) We expect the breakout above 80 to target the June 2012 low at This view would be negated by a move back below 80 which could cause another drop to 70.

7 The Quarterly REPORT Spread betting* and CFD trading carry a high level of risk and can result in losses. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Please note that 79 % of our retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing money London Capital Group Holdings plc (LCG Group) is a company registered in England and Wales under registered number: and is a member of the NEX Exchange. London Capital Group Limited (LCG) is a company registered in England and Wales under registered number: LCG is authorised and regulated by the Financial Conduct Authority (FCA) under the company's registration number of: The registered address for LCG Group and LCG is: 77 Grosvenor Street, Mayfair, London, W1K 3JR. London Capital Group (CYPRUS) Limited (LCG CY) is a company registered in Cyprus under registered number: LCG CY is authorised and regulated by the Cyprus Securities and Exchange Commission (License Number: 341/17). The registered address for LCG CY is: 205 Arch. Makarios Avenue III, Victory House, 5th Floor, 3030 Limassol. LCG Int. Limited (LCG INT) is a company registered in Cayman Islands under registered number: CT LCG INT is authorised and regulated by the Cayman Islands Monetary Authority (CIMA) with License No The registered address for LCG INT is: 2nd Floor Elgin Court, 58 Elgin Avenue, George Town, Grand Cayman. LCG Capital Markets Limited (LCG BHS) is a company registered in the Commonwealth of the Bahamas under registered number: B. LCG BHS is authorised and regulated by the Securities Commission of Bahamas (SCB) with License No. SIA-F194. The registered address for LCG BHS is: Sassoon House, Shirley Street and Victoria Avenue, Nassau in the Island of New Providence, P.O.BOX SS-5383, Bahamas. *Important Note: Please note that Spread Betting is only available for clients residing in the United Kingdom and registered with London Capital Group Limited.