Weekly Fundamentals - 20 January 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
In conclusion to our report three weeks ago we wrote:
"No changes to our thoughts of last week with the exception that the US 30 Year Bond is beginning to look like good value and as we believe that the inauguration of Trump as president on the 20/1 will herald the top in risk, the bond may witness a flight to safety.
 
Therefore our recommendations are:
Unchanged as from our last report
Use rallies in risk to sell into
Buy precious metals especially gold on dips
Buy bonds on dips
Sell the USD on any rallies especially against the AUD, YEN and NZD."
 
Now let's see how we fared on our recommendations:
Selling risk continues to be the best trade
Buying precious metals was good
Buying Bonds was not
Selling the USD against the AUD and NZD was great whilst it rallied verty marginally against the YEN.
 
A very good week.
 
A quiet week in terms of data.
 
USD: The US$ Index closed lower last week.
We start on Wednesday with Crude Oil Inventories.
On Thursday we have Unemployment Claims anticipated to be 247,000 from the previous 234,000. This is followed by GDP expected to fall from 3.5% to 2.1% and finally Core Durable Goods Orders which measures the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. It is thought to fall slightly from 0.6% to 0.5%.
COT data shows that large commercials marginally decreased their net short position in the US$ Index from -59,883 to -57,158 last week. This is close to a 52 week extreme so we therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO rose against the USD last week.
Two items for the EURO this week.
On Sunday the ECB President speaks.
On Wednesday we have the German Business Climate figure anticipated to rise from 111.0 to 111.3.
COT data for the Euro shows that large commercials increased their net long position from +72,830 to +74,577 last week. We therefore alter our view from SLIGHTLY BEARISH to NEUTRAL.
 
GBP: The GBP rose against the USD last week.
On Tuesday we have the EU Membership Court Ruling. This is when the United Kingdom's High Court is due to announce a ruling regarding the government's ability to bypass parliament and initiate the Brexit by triggering Article 50 of Lisbon Treaty, at the Royal Courts of Justice, in London. It is important.
On Thursday we the GDP number estimated to be 0.5% from the previous 0.6%.
COT data shows that large commercials slightly decreased their net long position from +78,059 to +77,179 last week. We therefore remain BULLISH.
 
YEN: The YEN fell very slightly against the USD last week.
There is only one item for the YEN this week which takes place on Thursday when we have Tokyo Core CPI anticipated to be -0.4% from the previous -0.6%.
COT data shows that large commercials marginally decreased their net long position from +107,588 to +107,213 last week. We therefore remain BULLISH.
 
AUD: The AUD rose strongly against the USD last week.
Two items for the AUD this week.
CPI on Tuesday is expected to remain static at 0.7%. This is followed by Trimmed Mean CPI which measures the change in the price of goods and services purchased by consumers, excluding the most volatile 30% of items. It is thought to be 0.5% from 0.4%.
Wednesday is a bank holiday in Australia.
COT data shows that large commercials significantly decreased their net long position from +16,043 to +3,372 last week. We therefore alter our view from SLIGHTLY BULLISH to NEUTRAL.
 
CNY: There is no data 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.
 
RISK:
S&P500: The S&P500 fell very slightly last week. Large commercials decreased their net long from +9,365 to +2616 last week. We therefore remain BEARISH.
RUSSELL2000: The RUSSELL2000 fell last week. Large commercials substantially decreased their net short from -90,546 to -69,028 last week. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 fell very slightly last week. Large commercials increased their net short position from -83,809 to -91,857 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose last week. Large commercials slightly decreased their net short position from -125,816 to -123,111 last week. Now that large commercials hold a net short position which is smaller than 200,000 we are slightly bullish. We therefore remain SLIGHTLY BULLISH.
SILVER: SILVER rose last week. Large commercials slightly increased their net short position from -78,937 to -81,736 last week. We therefore remain BEARISH.
COPPER: COPPER fell last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials slightly decreased their net short position from -50,099 to -49,272 last week. Large commercials generally carry a net neutral position. This is now a substantial short position and remains close to a 52 week extreme. We therefore remain BEARISH.
CRUDE OIL: CRUDE rose very slightly last week. Large commercials increased their net short position from -465,400 to -482,371 last week. This continues to be a 52 week extreme. We therefore remain BEARISH.
 
The gold:silver ratio decreased from 71.20 to 70.93 indicating slight silver outperformance over the period.

DEBT:
US 30 YEAR BOND: The BOND fell last week. Large commercials substantially decreased their net long position from +89,656 to +66,108 last week. We therefore remain BULLISH.

OTHER FX:
CAN$: The CAN$ fell last week. Large commercials substantially decreased their net long position +11,325 to +4,856 last week. We therefore remain alter our view from SLIGHTLY BULLISH to NEUTRAL.
NZD: The NZD rose last week. Large commercials Sslightly decreased their net long position from +13,751 to +12,022 last week. We therefore remain BULLISH.

THOUGHTS FOR NEXT WEEK
We feel that as the USD INDEX has now fallen for 4 weeks in succession it may be time for a respite rebound.
This is being indicated by a number of currencies especially the AUD and CAN$ for which their respective COT readings means that we have to become less bullish in the short term.
This may have a short term affect on precious metals.
 
Therefore our recommendations are:
Use rallies in risk to sell into
Take short term profits on precious metals
Buy bonds on dips
Take profits on short USD positions.
 
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