Weekly Fundamentals - 09 October 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report last week we wrote:
"It all hinges on the USD.
We are quickly approaching the US presidential election in November. Any indication in the polls that Trump is doing well will have an adverse affect on the USD.
Which currencies will benefit the most?
According to COT it would seem that the AUD, NZD and CAN$ will benefit accordingly.
However COT for the precious metals is telling us that Clinton will prevail."

Now let's see how we fared on our recommendations:
The USD continued its rally against most currencies particularly the GBP.
Gold and silver fell both fell dramatically.
The AUD, CAN$ and NZD all fell.
 
A bad week.
 
A light week in terms of data with noteworthy news only for the USD.
 
USD:The US$ Index rose strongly last week closing on its high.
We start on Wednesday with the FOMC Meeting Minutes.
On Thursday we have the usual Unemployment Claims figure estimated to be 252,000 from the previous 249,000. We the have Crude Oil Inventories.
On Friday we start with Core Retail Sales expected to rise from -0.1% to ).4%.
We then have PPI also expected to rise from 0.0% to 0.2%.
Retail Sales is expected to improve from -0.3% to 0.6%.
The Consumer Sentiment figure is expected to remain static at 92.1.
Finally The Fed Chairperson speaks.
COT data shows that large commercials slightly increased their net short position in the US$ Index from -17,421 to -17,908. We therefore remain BULLISH.
 
EURO:The EURO fell slightly against the USD last week.
Only one item of note for the EURO this week.
On Tuesday we have the German Economic Sentiment figure which is thought to make a big leap forward from 0.5 to 4.2.
COT data for the Euro shows that large commercials increased their net long position from +87,842 to +97,344. We remain BULLISH.
 
GBP: The GBP fell strongly against the USD last week. The GBP is now trading at a 31 year low against the USD.
There s no economic data for the GBP this week.
All attention will continue to focus on the 'war of words' between the UK and the EU regarding BREXIT.
COT data shows that large commercials slightly increased their net long position from +103,256 to +109,799. As this is once again close to a 52 week extreme we remainVERY BULLISH.
 
YEN:The YEN fell against the USD last week.
There is only one item for the YEN this week.
On Monday we have the Current Account figure which is expected to improve from 1.45T to 1.58T.
COT data shows that large commercials decreased their net short position from -62,263 to -57,193 last week. We therefore remain SLIGHTLY BEARISH.
 
AUD:The AUD fell against the USD last week.
There is no news worthy items for the AUD this week.
COT data shows that large commercials increased their net short position from -18,169 to -28,121 to last week. We therefore alter our view from SLIGHTLY BULLISH to NEUTRAL.
 
CNY:There are three items for the CNY this week.
On Wednesday we have the Trade Balance figure which is thought to be 365B from the previous 346B.
On Thursday we have both CPI and PPI. The former is expected to increase from 1.3% to 1.6% and the latter to improve from -0.8% to -0.4%.
 
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.
 
RISK:
S&P500: The S&P500 fell last week. Large commercials increased their net short position from -25,778 to -38,857 last week. We therefore remain SLIGHTLY BEARISH.
RUSSELL2000: The RUSSELL2000 fell last week. Large commercials increased their net short from -18,059 to 21,827 last week. We therefore remain BEARISH.
NASDAQ100:The NASDAQ100 fell slightly last week. Large commercials decreased their net short position from -139,885 to -139,405 last week. We therefore remain BEARISH.
 
COMMODITIES:
GOLD:GOLD fell strongly last week. Large commercials decreased their net short position from -314,594 to -271,242 last week. Now that large commercials hold a net short position which is greater than 100,000 we are bearish but as it is now less than the 300,000 mark we alter our view from VERY BEARISH to BEARISH.
SILVER: SILVER fell strongly last week. Large commercials decreased their net short position from -100,818 to -90,896 last week. We therefore remain VERY BEARISH.
COPPER: COPPER rose slightly last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials decreased their net long position from +1,971 and are now net short -952 last week. Large commercials generally carry a net neutral position. This is a neutral position. We therefore remain NEUTRAL.
CRUDE OIL: CRUDE fell slightly last week. Large commercials substantially increased their net short position from -296,867 to -356,221 last week. As this is a 52 week extreme we alter our view from NEUTRAL to BEARISH.
 
The gold:silver ratio increased from 68.72 to 71.78 indicating silver strong underperformance last week.
 
DEBT:
US 30 YEAR BOND: The BOND fell slightly last week. Large commercials increased their net short position from -12,656 to -30,565 last week. We thereforeremain SLIGHTLY BULLISH.
 
OTHER FX:
CAN$: The CAN$ fell last week. Large commercials increased their net long position +18,861 to +20,364 last week. We therefore remain BULLISH.
NZD:The NZD fell last week. Large commercials increased their net long position from +4,654 to +5,147. We therefore remain BULLISH.
 
THOUGHTS FOR NEXT WEEK
It continues to all hinge on the USD.
We are quickly approaching the US presidential election in November. Trump seems to be determined to kill off any chance he has of winning but the closer we get to the election date the more violent the opinion poll swings will be. The USD will swing wildly in conjunction.
Which currencies will benefit the most?
It would seem that the EURO stands the best chance of benefitting.
The GBP remains problematic. COT indicates it is an absolute buy whilst the market continues to pile in on the short side. The swing when it happens will be ferocious and many will suffer deeply.
Precious metals have fallen considerably of their highs and will soon resemble value. Be patient.
 
Therefore our recommendations for next week are:
Stay wary of the USD
Buy precious metals in very small quantities
Buy GBP in very small quantities
Buy the EURO.
 
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