Weekly Fundamentals - 20 December 2015

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
Last week we stated that:"Only one day matters this week and that is Wednesday. This week may be the first time in nearly 520 weeks when the FED may hike interest rates.
What will the effect be if they do? Will the market perceive this as a positive as it means the economy is doing well and in the case the recent weakness in risk has already priced the hike in? Will risk therefore rally or continue to fall? What if rates are not hiked? Will the market perceive this as a negative as the economy is too weak even after all the stimuli thrown at it?
What affect will the decision have on the USD. Will a hike boost the USD Index and therefore USD denominated assets?
So many unknows. The only known is heightened volatility."
Not surprisingly we were right. The FED did increase rates, volatility was heightened and general confusion was the order of the day.
Risk initially rallied then fell as did the USD Index.
This week is very light in terms of data as the holiday season approaches and therefore the COT data is of most importance.
This will be our last WEEKLY FUNDAMENTAL report for 2015.
 
USD: Two items for the USD.
On Tuesday we have the GDP n umber anticipated to be 1.9% from the previous 2.1%.
Lastly on Thursday we have the usual Unemployment Claims number thought to be 270,000.
COT data shows that large commercials reduced their net short position slightly in the US$ Index from 61,784 to -45,727. We therefore remain SLIGHTLY BEARISH.
 
EURO: There is no data for the EURO this week.
COT data for the Euro shows that large commercials decreased their net long position from 197,108 to 185,311. We remain BULLISH.
 
GBP:  Only one item for the GBP.
Wednesday sees the release of the Current Account figure which is expected to show a growing deficit to -21.3Bn from the previous -16.8Bn.
Large commercials decreased their net long position from 44,590 to 34,007. We therefore alter our view from BULLISH to SLIGHTLY BULLISH.

YEN: Three items for the YEN.
On Wednesday we have the Monetary Policy Meeting Minutes.
On Thursday we have Household Spending expected to be a negative 2.1% from last month's negative 2.4% and Tokyo Core CPI which is expected at 0.1% from last month's 0.0%.
COT data shows that large commercials substantially reduced their net long position from 98,557 to 42,586. We therefore alter our view from BULLISH to NEAUTRAL.

AUD: here is no data for the AUD this week.
COT data shows that large commercials substantially reduced their net long position for the fourth week in a row from 44,118 to 21,381. We therefore alter our view from NEAUTRAL to BEARISH.

CNY: There is no data this week for the CNY.
There is no COT data for the CNY.
 
COT DATA OF NOTE:
S&P500: Last week large commercials reduced their net long position from 110,954 to 72,672. As long as large commercials remain net long to have to err on the side of being bullish. We therefore remain SLIGHTLY BULLISH.
GOLD: Large commercials slightly reduced their net short position from 13,997 to 8,266 . This continues to be very close to being the smallest net short position since the only time this century they were net long on 11/12/01, which was nearly 14 years ago. We therefore remain SUPER BULLISH.
SILVER: Last week saw large commercials reduce their net short position from 31,027 to 23,542. We therefore remain SLIGHTLY BULLISH.
The gold:silver ratio widened from just under 777 to just over 75 indicating silver outperformance for the week.

THOUGHTS FOR NEXT WEEK
Our thoughts for next week are much the same as the rest of the globe's market participants and that is the holiday season.
We would therefore like to take this opportunity to wish all our readers and followers a very happy break and a prosperous and healthy 2016.
This WEEKLY FUNDAMENTAL piece will re-commence in the first week of the new year.
 
 
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Stay nimble. Good luck trading.

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