Weekly Fundamentals - 05 November 2016

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report two weeks ago we wrote:
"Only eight days to go before the US elections.
Will the establishment prevail or will Trump surprise?
The USD will be volatile which will have a direct bearing on the precious metals.
However COT is telling us that it is wise to remain wary of risk and the USD whilst slightly less so on the metals.
This is an important week with the NonFarm Payroll data and much central bank activity which will drive sentiment and volatility as will swings in opinion polls.
It will be interesting.
 
Therefore our recommendations for next week are:
Stay wary of the USD
Continue accumulating precious metals
Continue buying the EURO
Continue selling risk."

Now let's see how we fared on our recommendations:
Staying wary of the USD was a good call as the USD Index closed on its lows
Buying of precious metals was also correct as both gold and silver continued their ascent
Buying the EURO was brilliant as it closed strongly on its highs
Selling risk was also spot on
 
A very good week.

An extremely quiet week in terms of data for all the products we follow. However do not forget that on Tuesday we have the US elections which will ensure massive volatility.
We have just produced a MACRO report on the election which can be read here.
 
USD: The US$ Index fell sharply closing on its lows for the week.
The big day is Tuesday when we have the US elections.
On Wednesday we have Crude Oil Inventories
Thursday sees the usual Unemployment Claims number estimated to be 267,000 from 265,000.
Lastly on Friday we see Consumer Sentiment thought to rise slightly from 87.2 to 87.4.
COT data shows that large commercials marginally increased their net short position in the US$ Index from -59,317 to -60,123 last week. We therefore remain BEARISH.
 
EURO: The EURO rose against the USD and closed near its highs last week.
There is no data of note for the Euro this week.
COT data for the Euro shows that large commercials increased their net long position from +138,083 to +156,389 last week which is close to a 52 week rolling high. We therefore remain BULLISH.
 
GBP: The GBP rose strongly against the USD last week. The GBP continues to trade at a 31 year low against the USD.
A very quiet week for the GBP.
The only newsworthy item takes place on Tuesday with the release of Manufacturing Production expected to rise from 0.2% to 0.5%.
COT data shows that large commercials slightly decreased their net long position from +98,795 to +96,565 last week. As this continues to be close to a 52 week extreme we remain VERY BULLISH.
 
YEN: The YEN rose against the USD last week.
Only one item for the YEN this week which is on Tuesday when we have the Current Account number expected to remain the same at 1.98T.
COT data shows that large commercials very slightly increased their net short position from -28,157 to -28,239 last week. We therefore remain NEUTRAL.
 
AUD: The AUD rose against the USD last week.
There is no data for the AUD this week.
COT data shows that large commercials increased their net short position from -40,171 to -46,709 last week. We therefore remain NEUTRAL.
 
CNY: A busy week for the CNY.
We start on Monday with the Trade Balance number which is expected to show a massive move higher from 278B to 366B.
On Tuesday we have both the CPI and PPI numbers.
CPI is anticipated to edge higher from 1.9% to 2.1% and PPI is also expected to move higher from 0.1% to 0.9%.
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.
 
RISK:
S&P500: The S&P500 fell last week. Large commercials substantially increased their net short position from -22,395 to -56,964 last week. We therefore remain SLIGHTLY BEARISH.
RUSSELL2000: The RUSSELL2000 fell last week. Large commercials decreased their net short from -9,683 and are now net long +6,128 last week. We therefore alter our view from BEARISH to NEUTRAL.
NASDAQ100: The NASDAQ100 fell last week. Large commercials decreased their net short position from -164,651 to -131,820 last week. We therefore alter our view from BEARISH to NEUTRAL.
 
COMMODITIES:
GOLD: GOLD rose last week. Large commercials increased their net short position from -217,599 to -239,251 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 remain NEUTRAL.
SILVER: SILVER rose last week. Large commercials increased their net short position from -73,396 to -76,917 last week. We therefore remain BEARISH.
COPPER: COPPER rose last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials decreased their net long position from +12,756 and are now net short -6,534 last week. Large commercials generally carry a net neutral position. This is a neutral position. We therefore alter our view from BULLISH to NEUTRAL.
CRUDE OIL: CRUDE fell last week. Large commercials decreased their net short position from -414,501 to -375,009 last week. As this remains close to a 52 week extreme we remain BEARISH.
 
The gold:silver ratio decreased from 71.94 to 70.83 indicating silver outperformance last week.
 
DEBT:
US 30 YEAR BOND: The BOND rose last week. Large commercials decreased their net short position from -5,403 and are now net long +22,024 last week. We therefore remain SLIGHTLY BULLISH.
 
OTHER FX:
CAN$: The CAN$ was barely changed last week. Large commercials increased their net long position +21,648 to +24,770 last week. We therefore remain BULLISH.
NZD: The NZD rose last week. Large commercials decreased their net short position from -888 to -433 last week. We therefore remain NEUTRAL.
 
THOUGHTS FOR NEXT WEEK
There will only be one thing on traders minds next week which is the American election.
Whilst economic data is very light, volatility will not be.
The recent slump in risk has coincided with Trump's better fortunes in the opinion polls. If he does win risk may take a short term battering, if he does not they may spike higher.
However COT is beginning to tell us that they are oversold and due a bounce. Would it not be ironic if a Trump victory results in risk rallying and precious metals falling?
The USD remains under pressure irrespective of who wins.
 
Therefore our recommendations for next week are:
Stay wary of the USD
Continue accumulating precious metals but only on dips
Continue buying the EURO
Take profits on your risk short positions and begin accumulating very slowly.
 
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