Research Team at Deutsche Bank, has listed down the key themes for 2016. Key Quotes “China FX: the tail risk of a sharp one-off devaluation of the yuan remains, but our base case is that of a gradual depreciation keeping the yuan stable vs. a basket of global currencies. The surprise yuan devaluations vs. the dollar were not competitive devaluations in response to an ailing economy, but rather China’s response to an unwanted yuan rise vs. other currencies, given dollar strength. European financial sector stress: market stress built following fears of more regulatory capital requirements, disappointing bank earnings announcements, the Italian banks’ non-performing loans story, and the prospect of lower interest rates for longer putting further pressure on bank margins. Relief could come from assurances that capital requirements will not be increased significantly and that banks will be shielded from much of the costs of negative deposit rates, both of which the ECB has signalled recently. Oil: short-term prospects for oil prices are uncertain, even if oil is undervalued, and prospects for a sustained move higher in prices improves only beyond 2016. The overall decline has been driven by a material supply shock, but demand worries and market sentiment contributed this year. Note that at current levels the impact of large per cent price swings, unless sizeable also in dollar terms, is increasingly less relevant for markets and macro. Fed hikes: market pricing of hikes has fallen too much, with less than 50 per cent odds of a rate rise in 2016. This is likely overdone but a repricing requires evidence that US growth is not slowing materially. Brexit: our base case is a marginal win for the Stay camp at the referendum, but the risk of Brexit is high. The deal between the UK and EU is a positive in that it allows PM Cameron to campaign strongly for Stay; the referendum will be held on 23-June, therefore limiting the period of uncertainty. EM corporate debt: cash buffers are sufficient for 2016, but solvency problems could accelerate from 2017. Approximately $3.5 trillion of US dollar-denominated debt has been issued by EM firms since 2010. Many of these companies have dollar revenues or have hedged currency exposures. But some companies are bound to have overextended themselves and will face difficulties; the stronger dollar and rising cost of dollar funding will trigger corporate defaults.” For more information, read our latest forex news.