Weekly Fundamentals - 16 November 2015

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
This week's article is a day late due to the FED holiday on 11/11. This means that COT data was only made available on the 16/11.

In last week's summary we wrote that markets would be driven by FED interest rate expectations and that risk as measured by the SP500 had further upside and that commodities would seem to be nearing their respective lows.
We were wrong on the SP500 and the jury is out on commodities.
This week whilst light in terms of economic data will not be quiet after events in France.
 
USD: On Tuesday we have both CPI and Core CPI. The former includes food and energy and is expected to rise from last month's -0.2% to 0.2%. CORE CPI is expected to remain unchanged at 0.2%.
On Wednesday we have Building Permits which is anticipated to show that 1.15Mn permits were issued during the month from the previous month's 1.11Mn. We also have the important FOMC Meeting Minutes.
On Thursday we have the usual Unemployment Claims number estimated to show that 272,000 new registrants a slight fall from last month's 276,000.
Finally we have the FED Manufacturing Index which is thought to climb from -4.5 to 0.1.
COT data shows that large commercials continued to increase their net short position slightly in the US$ Index from 47,062 to 53,316. We therefore continue to remain NEUTRAL.
 
EURO: In light of the situation in France most attention will this week be focused on the Euro.
On Monday Draghi the ECB President speaks.
On Tuesday we have the German ZEW Economic Sentiment figure which is anticipated to show a big increase from last month's 1.9 to 6.7.
Finally on Friday ECB President again speaks.
COT data for the Euro shows that large commercials substantially increased their net long position from 168,944 to 184,555. We therefore remain BULLISH.
 
GBP: Only two data points for the GBP this week.
On Tuesday we see the release of CPI which is anticipated to be the same as last month's -0.1%.
Thursday sees Retail Sales which is anticipated to fall by 0.4% from last month's rise of 1.9%.
Large commercials very substantially increased their net long position from 7,730 to 36,901. We therefore turn BULLISH.

YEN: On Sunday we had the Preliminary GDP number which contracted by 0.1% from last month's contraction of 0.3%.
On Wednesday we have the BOJ Monetary Policy Statement.
Finally on Thursday we have the BOJ Press Conference.
COT data shows that large commercials substantially increased their net long position from 65,127 to 97,686. We therefore alter our stance from SLIGHTLY BULLISH to BULLISH.

AUD: Only one item for the AUD on Monday which is the RBA's Monetary Policy Meeting Minutes.
COT data shows that large commercials increased their net long position from 59,495 to 80,186. We therefore remain SLIGHTLY BULLISH.

CNY: There are no data points for the CNY this week.
There is no COT data for the CNY.
 
COT DATA OF NOTE:
S&P500: Last week large commercials reduced their net long position from 226,894 to 137,487. We therefore continue to be BULLISH.
GOLD: Large commercials substantially reduced their net short position from 124,988 to 71,894. This is the second week running that large commercials reduce their net short position which is positive and is large enough for us to alter our view. We therefore move from BEARISH to NEUTRAL.
SILVER: Last week saw large commercials slightly decrease their net short position from 67,141 to 50,129. We therefore alter our view from BEARISH to NEUTRAL.

THOUGHTS FOR NEXT WEEK
This week will be all about events in France and how they affect the Euro.
What will be the reaction of the ECB and how will this affect risk?
Immediate reaction may be a flight to safety i.e. the USD, how will this affect the SP500 and what bearing will it have on the precious metals which should rally in times like this but may not due to USD strength?
Many questions with no obvious answers.
The only thing that is obvious is that volatility will be heightened and that the unexpected is the most likely outcome.
 
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