by Eli Wright

As markets re-open to begin 2017 trading, tops the early headlines, as the digital currency rockets past $1,000 on its way toward its all-time high of $1,216. Activity on most other markets is more tempered.

US equities closed 2016 to the upside, as did the , but uncertainty about Trump’s policies abound, and the ripple effects of changing US policy and higher prices among other things, could have knock-on effects for the global markets. Nevertheless, equities in Asia and Europe began the year by heading higher.

Overnight, the gained 1.02%, to close at 3,135.30 while the rose 0.51%, to 22,112.00. Japan's was closed for the New Year holiday.

In Europe this morning, the rose 0.35% to 7,167.70, smashing through its previous all-time high of 7,123 reached intraday during April 2015; the is 0.2% higher, to 11,621; and the is up 0.45%, to 3,319.00.

In pre-market US trading, the is up 0.57%; the is up 0.69%; and the is up 0.7%.

US bond yields are higher this morning as well: The note yield is 1.214%; the yield is 2.476%; and the yield is 3.082%.

Forex

Since October, the has moved strongly higher, largely due to the increasingly obvious fact that the Fed would be raising rates at least once before the end of 2016. Market conditions— including rising US equities, increasing bond yields, and ultimately the FOMC’s rate hike in December along with plans for in 2017—have also contributed to the greenback's powerful uptrend.

Nevertheless, over the past two weeks, the Dollar Index has consolidated. It dropped nearly one percent as 2016 came to a close. Could this be the start of a , at least in the short-term? If so, there is downside potential for a correction to the next most recent consolidation range, between 101.50-101.

Thus far today, however, the is slightly higher, up 0.68%, to 102.90. There is a slew of critical economic data set to be released this week, which could help signal how the , , and USD will perform.

Of importance for the euro, were released this morning, coming in better than expected (-17K compared to the -5K forcast). For the pound, British Manufacturing PMI is already out, followed later this week by , and .

In the US, comes out at 10 AM ET this morning; will be released tomorrow; figures will be published on Thursday; and to end the week, perhaps the most significant monthly announcement of all, US and data will be released on Friday.

Over the longer-term, Goldman Sachs foresees the euro, pound, and all falling versus the USD in 2017. At the same time, they expect some emerging market currencies including the , , and to post slight increases, while anticipating others, including the and will suffer declines.

In marked contrast, Credit Suisse expects the USD/JPY pair to fall to ¥96, which would be a decline of 19%.

As mentioned earlier, Bitcoin had a great finish in 2016 and has moved aggressively higher to start 2017, rising more than 6% in the first two days of trading during the new year. .

Commodities

prices have stabilized above $50 over the past three weeks, , on the strength of the agreement forged by the 11 non-OPEC nations who joined OPEC’s deal to limit production for the first half of this year. Many insiders now see oil surpassing $60 in 2017, less than one year removed from below-$30 prices.

As Adam Ritchie, a director of consulting firm Petro-Logistics SA said:

“The mood has definitely turned more bullish, people are more confident that OPEC will do enough to rebalance the market in the first half of 2017.”

Crude is currently trading at $54.97; is at $58.08.

gained 8.5% in 2016, marking the first annual gain in three years. However, it was a tale of two half-years ; the precious metal rose almost 25% between January-July 2016, before falling approximately 17% to close out the year. At this point, the prospects for gold in 2017 , as the higher dollar and hawkish Fed weigh on prices, and soaring equity markets boost risk-on sentiment.

Gold is currently trading at $1,148.85.

Stocks

US indices ended last week slightly down, but they wrapped up 2016 on an up note. All the major indices saw gains: the rose 13.42%, the rose 9.5%, and the finished 7.5% higher on the year. The small-cap jumped nearly 20%.

There seems to be plenty of room for cautious optimism as we start 2017, at least in the short-run. For the third straight year, there appear to be no bears when it comes to the S&P: every analyst surveyed by Bloomberg was bullish on the S&P 500, and the difference between the highest and lowest predictions is only 200 points, the tightest spread ever. However, the average forecast only calls for a 4% increase, about 6% less than the bump up experienced in 2016.

Merril Lynch has given most global exchanges the green light as well.

However, a great deal depends on how Washington’s new majority-Republican government tackles issues, most notably fiscal stimulus and global protectionist trade policies.

As Candace Browning, head of BofA Merrill Lynch Global Research said:

“If investors choose asset classes, sectors and stocks carefully, they can meaningfully outperform the market. 2017 could be the year of the active investor.”

Trumpian fiscal policies and tax breaks could help small-caps, as well as and stocks.

The S&P's sector increased more than 23% last year, and it could achieve additional gains on the back of rising oil prices.

stocks, which were up 20% overall in 2016, could be aided still more by fewer banking regulations and higher interest rates.

Those same higher interest rates, however, might put a damper on Real Estate stocks. And could be hurt by the higher dollar.

An increase in military spending would help defense stocks.

companies could suffer on the heels of international trade reforms.

Perhaps the biggest unknowns pertain to stocks, as it remains to be seen if and when Obamacare will be overhauled, and how Congress addresses the issue of skyrocketing drug prices and Big Pharma price-fixing.