Weekly Fundamentals - 02 January 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
This is our first Fundamental piece since the 20/12 and the first for 2016. Before I begin I would like to take this opportunity to wish our readership a very healthy and happy 2016.
The first week of 2016 is fairly full in terms of economic data with lots of PMI data as well as the first Friday of the first week of the month Unemployment data in the US.
 
USD: The week starts on Monday when we have Manufacturing PMI which is expected tyo rise from 48.6 to 49.1
On Wednesday we have Trade balance expected at a negative 44.0B from last month's -43.9B. This is followed by Non-Manufacturing PMI expected to rise slightly from 55.9 to 56.0. Finally we have the FOMC Meeting Minutes.
Thursday sees the customary Unemployment Claims number thought to be 271,000 from last month's 287,000.
On Friday we have the highly anticipated Average Hourly earnings expected to remain unchanged at 0.2%, NonFarm payroll expected to fall from 211,000 to 202,000 and the Unemployment rate thought to remain unchanged at 5.0%.
COT data shows that large commercials reduced their net short position slightly in the US$ Index from -45,727 to 41,185. 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 185,311 to 182,071. We remain BULLISH.
 
GBP:  Three items for the GBP this week.
On Monday we have manufacturing PMI thought to rise from 52.7 to 52.8.
On Tuesday we have Construction PMI expected to increase from 55.3 to 56.1.
lastly on Wednesday we have Services PMI thought to show a small fall from 55.9 to 55.6.
Large commercials increased their net long position from 34,007 to 49,672. We therefore alter our view from SLIGHTLY BULLISH to BULLISH.

YEN: There is no economic data for the YEN this week.
COT data shows that large commercials slightly increased their net long position from 42,586 to 50,938. We therefore remain NEUTRAL.

AUD: Three items for the AUD this week.
On Wednesday we have both Building Approvals and the Trade balance. The former is expected to show a significant fall from last month's positive 3.9% to a negative 2.8%. the Trade balance number is expected to improve slightly from last month's -3.31B to -2.98B.
Thursday sees the release of retail sales which is expected to come out at 0.4% from the previous 0.5%.
COT data shows that large commercials substantially increased their net long position from 21,381 to 33,568. We therefore alter our view from BEARISH to NEUTRAL.

CNY: Two items for the CNY.
On Sunday night we have Manufacturing PMI expected to show a small rise from 48.6 to 48.9 indicating that the economy continues to contract but at a reduced rate.
At the end of the week on Friday we have CPI estimated to be 1.7% from last month's 1.5%.
There is no COT data for the CNY.
 
COT DATA OF NOTE:
S&P500: Last week saw large commercials slash their net long position and move into negative territory. They moved from a positive 72,672 to a negative 28,007. This is the first week in 14 that the large commercials have turned net sellers. We therefore alter our view from BULLISH to NEUTRAL.
GOLD: Large commercials slightly reduced their net short position from 8,266 to 22,251. 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 increase their net short position from 23,542 to 31,162. We therefore alter our view from SLIGHTLY BULLISH to NEUTRAL.
The gold:silver ratio widened from just over 75 to 76.77 indicating silver underperformance for the week.
NZD: Last week saw large commercials move from an essentially flat position to a positive 3,676. We therefore start our analysis of the NZD with a SLIGHTLY BULLISH view.

THOUGHTS FOR NEXT WEEK
This is the first week of the New Year. It is also the first week of the month and the first Friday of the month. Hence we have employment data.
Traders, fund managers and hedge fund managers have completed their end of year book squaring and everyone is looking forward to a fresh start.
We are in the process of completing a new MACRO piece with our predictions for 2016. We will notify our readership the moment it is ready.
 
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Stay nimble. Good luck trading.

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