Weekly Fundamentals - 16 July 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 

In conclusion to our report last week we wrote:
"We have made minimal changes this week.
We turn slightly bullish for the EURO, neutral for the S&P500 and slightly bearish for the NZD.
The week will once again be GBP driven with attention on the MPC rate vote. The question is will market participants regard this as bullish or regard it as a negative for risk assets and how will the GBP perform.
Three heavy weeks of falls may in fact result in a counter-intuitive rally.
Remember when the US embarked on its QE1, QE2 and QE3 initiatives the USD rallied with risk.
 
Therefore our recommendations for next week are:
Continue selling precious metals
Begin accumulating the Euro
Buy GBP
Stay long risk through the RUSSELL2000."
 
Now let's see how we fared on our recommendations:
We advocated the continued selling of precious metals. We were right on both counts of gold and silver.
We recommended the slow accumulation of the EURO. Again correct as the EURO rose slightly on the week.
Buying the GBP was also spot on.
Staying long risk was also correct.
 
The week is quiet in terms of data as we enter the quietest trading month of the year.
COT data is therefore even more important.
 
USD: The US$ Index rose last week.
A quiet week for the USD.
On Tuesday we have Building Permits which is thought to remain virtually unchanged form last month's 1.14M at 1.15M.
On Wednesday we have the Crude Oil Inventories number.
Thursday we have the usual Unemployment Claims figure estimated at 271,000 from 254,000 and the Manufacturing Index which is expected to rise from 4.7 to 5.1.
COT data shows that large commercials slightly increased their net short position in the US$ Index from -17,653 to -19.254. This continues to remain close to a 52 week rolling extreme. We therefore remain VERY BULLISH.
 
EURO: The EURO rose slightly against the USD last week.
An important week for the EURO.
On Tuesday we have the German Economic Sentiment indicator which is expected to fall dramatically from 19.2 to 8.2.
On Thursday we have the Minimum Bid Rate which is the interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system and is expected to remain at 0.00%.
We also have the important ECB Press Conference.
COT data for the Euro shows that large commercials increased their net long position from +93,750 to +108,149. As this is the fifth week in a row that large commercials increase their net long position we remain SLIGHTLY BULLISH.
 
GBP: The GBP rose against the USD last week.  The GBP is still trading at a 30 year low against the USD. This is the first marginal rise in four weeks of large falls.
On Tuesday we have CPI which is anticipated to rise from 0.3% to 0.4%.
Wednesday sees the release of the Claimant Count Change which is expected to increase from last month's fall of 400 to a positive 4,100 which is not good.
This is followed by the Average Earnings Index expected to rise from 2.0% to 2.3%.
Finally on Thursday we have the Retail sales number expected to fall to -0.4% from the previous +0.9%.
COT data shows that large commercials increased their net long position from +66,383 to +83,138. As this is now virtually a 52 week extreme we remain VERY BULLISH.
 
YEN: The YEN fell against the USD last week.
There is no data for the YEN this week.
COT data shows that large commercials decreased their net short position from -65,015 to -42,008 last week. We therefore alter our view from BEARISH to SLIGHTLY BEARISH.
 
AUD: The AUD rose against the USD last week.
Only one item for the AUD this week.
On Monday we have the Monetary Policy Meeting Minutes.
COT data shows that large commercials significantly increased their net short position from -8,961 to -24,149. We therefore alter our view from SLIGHTLY BEARISH to BEARISH.
 
CNY: There is nothing noteworthy for the CNY this week.
There is no COT data for the CNY.
 
COT data of note on products we regularly comment on in our DAILY REPORTS and WEEKLY BONUS VIDEOS and for those products which show large commercials with extreme net positions.
 
S&P500: Large commercials increased their net short position from -49,114 to -81,270 last week. We therefore alter our view from NEUTRAL back to BEARISH.
GOLD: Large commercials decreased their net short position from -340,207 to -325,452 last week. Now that large commercials hold a net short position which is greater than 100,000 we are bearish and as it is now once again above the 300,000 mark we remain VERY BEARISH.
SILVER: Large commercials increased their net short position from -98,768 to -100,120 last week. We therefore remain VERY BEARISH.
 
The gold:silver ratio decreased from 67.43 to 66.19 indicating very marginal silver outperformance last week.
 
COPPER: Copper is an important metal as it is a leading indicator for many commodities. Large commercials very marginally decreased their net long from +21,919 to +15,631 last week. Large commercials generally carry a net neutral position. This therefore remains an interesting situation on the long side and we therefore remain SLIGHTLY BULLISH.
US 30 YEAR BOND: Large commercials slightly decreased their net short position from -103,815 to -98,813 last week. This is now no longer near the 52 week extreme. We therefore remain BEARISH.
CRUDE OIL: Large commercials decreased their net short position from -305,037 to -293,352 last week. This continues to be close to a 52 week extreme and we therefore remain BEARISH.
CAN$: Large commercials slightly increased their net short position from -18,148 to -22,521 last week. We therefore remain BEARISH.
NZD: Large commercials increased their net short position from -629 to -3,655 last week. We therefore remain SLIGHTLY BEARISH.
NASDAQ100: Large commercials substantially increased their net short position from -39,018 to -72,872. We therefore remain BEARISH.
RUSSELL2000: Large commercials decreased their net long position from +38,314 to +26,925. We therefore alter our view from BULLISH to SLIGHTLY BULLISH.

THOUGHTS FOR NEXT WEEK
We have made a number of small changes this week.
We are beginning to turn slightly less sanguine about risk as two of our indicators have turned bearish. Only the RUSSELL2000 remains in slightly bullish territory.
In conjunction with this COT for the commodity currencies have worsened so we must remain wary of both them as well as commodities in general.
The 30 Year Bond is finally beginning to show some interest and this coincides with our fledgling negativity towards risk.
 
Therefore our recommendations for next week are:
Continue selling precious metals
Continue accumulating the Euro
Buy GBP
Begin reducing risk
Sell commodity backed currencies

For timely, accurate trade signals follow our STTS service.
For those who want to join the lucky ones receiving real time, accurate and 100% honest and transparent trade signals visit and subscribe here.

Stay nimble. Good luck trading.


CHECK OUR INTERACTIVE ECONOMIC CALENDAR FOR FULL LIST OF UPCOMING DATA RELEASES

DISCLAIMER
The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Users acknowledge and agree to the fact that, by its very nature, any investment in CFDs and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.
Any recommendation, opinion or advice contained in such material reflects the views of TFF, and TFF expressly disclaims any responsibility for any decisions or for the suitability of any security or transaction based on it. Specifically, any decisions you may make to buy, sell or hold a security based on such research will be entirely your own and not in any way deemed to be endorsed or influenced by or attributed to TFF.
Past performance should not be seen as an indication of future performance. Market and exchange rate movements may cause the value of your investment to rise or fall and an investor may not get back the amount invested.
Investors considering opening a self-trading account should limit their exposure to maximum 10% of their investment capital.
Investments are not obligations of, deposits in, insured or guaranteed by TFF.