Weekly Fundamentals - 28 January 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
In conclusion to our report three weeks ago we wrote:
"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.
 
Now let's see how we fared on our recommendations:
We continued to use the rally in risk to sell into
Taking short term profits on precious metals was salient
We continued to buy bonds on the dip
Taking profits on short USD was good as it rallied steeply of its lows."
 
A reasonable week.
 
A busy week in terms of data culminating in the unemployment figure on Friday.
 
USD: The US$ Index closed marginally lower last week.
On Tuesday we have Consumer Confidence thought to decline marginally from 113.7 to 112.6.
Wednesday is busy.
We start with Manufacturing PMI thought to be 55.0 from 54.7, then Crude Oil Inventories, the FOMC Statement and the FED Funds Rate expected to remain at 0.75%.
On Thursday we have the usual Unemployment Claims figure estimated to be 251,000 from the previous 259,000.
Friday starts with Average Hourly earnings thought to decline from 0.4% to 0.3%, Nonfarm Employment expected at 170,000 from 156,000, the Unemployment Rate anticipated to remain the same at 4.7% and finally No Manufacturing PMI estimated to decline from 57.2 to 57.
COT data shows that large commercials marginally decreased their net short position in the US$ Index from -57,158 to -56,513 last week. This is close to a 52 week extreme so we therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO rose marginally against the USD last week.
Two items for the EURO this week.
On Tuesday the ECB President speaks.
On Thursday he speaks again.
COT data for the Euro shows that large commercials decreased their net long position from +74,577 to +60,267 last week. We therefore remain NEUTRAL.
 
GBP: The GBP rose against the USD last week.
A busy week for the GBP.
On Wednesday we have Manufacturing PMI thought to decline from 56.1 to 55.9.
Thursday is the busy day.
Construction PMI is expected to be 53.9 from the previous 54.2.
We then have the BOE Inflation Report, the MPC Official bank Rate Votes thought to remain unchanged at 0-0-9, the Monetary Policy Summary and finally the Official bank Rate expected to remain at 0.25%.
Finally on Friday we have Services PMI anticipated to decline from 56.2 to 55.8.
COT data shows that large commercials decreased their net long position from +77,179 to +73,025 last week. We therefore alter our view slightly from BULLISH to SLIGHTLY BULLISH.
 
YEN: The YEN fell against the USD last week.
A busy week for the YEN.
On Monday we have Household Spending which is expected to be -0.8% from the previous -1.5%.
We then have the Monetary Policy Statement, the BOJ Outlook Report and the BOJ Policy rate expected to remain unchanged at -0.1%.
On Tuesday we have the BOJ Press Conference.
COT data shows that large commercials decreased their net long position from +107,213 to +95,853 last week. We therefore remain BULLISH.
 
AUD: The AUD rose very slightly against the USD last week.
There is no data for the AUD this week.

COT data shows that large commercials significantly decreased their net long position from +3,372 last week and are now net short -9,193. We therefore remain NEUTRAL.
 
CNY: Two items for the CNY this week.
On Tuesday we have both Manufacturing and Non Manufacturing PMI. The former is expected to decline slightly from 51.4 to 51.2 whilst the latter is thought to remain static at 54.5.
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 rose strongly last week. Large commercials massively decreased their net long from +2616 and are now net short -72,982 last week. We therefore alter our view from BEARISH to VERY BEARISH.
RUSSELL2000: The RUSSELL2000 rose last week. Large commercials increased their net short from -69,028 to -82,696 last week. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 rose strongly closing on its high last week. Large commercials decreased their net short position from -91,857 to -86,604 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD fell last week. Large commercials slightly increased their net short position from -123,111 to -126,374 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 slightly last week. Large commercials slightly increased their net short position from -81,736 to -83,084 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 commercial slightly increased their net short position from -49,272 to -51,724 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 closed virtually unchanged last week. Large commercials increased their net short position from -482,371 to -497,940 last week. This continues to be a 52 week extreme. We therefore remain BEARISH.
 
The gold:silver ratio decreased from 71.20 to 69.59 indicating strong silver outperformance over the period.

DEBT:
US 30 YEAR BOND: The BOND fell last week. Large commercials increased their net long position from +66,108 to +71,362 last week. We therefore remain BULLISH.

OTHER FX:
CAN$: The CAN$ rose last week. Large commercials substantially decreased their net long position from +4,856 and are now net short -3,042 last week. We therefore remain NEUTRAL.
NZD: The NZD rose strongly last week. Large commercials decreased their net long position from +12,022 to +8,797 last week. We therefore alter our view from BULLISH to SLIGHTLY BULLISH.

THOUGHTS FOR NEXT WEEK
As anticipated last week the USD was and continues to be due a corrective bounce.
This is born out by the slight changes to our COT readings for the GBP and NZD.
We would therefore recommend standing aside from trading against the USD until our next report. This also means that we may see a continuation of the downside correction in precious metals.
COT readings for risk are not good and we would therefore continue to sell into any further strength.
 
Therefore our recommendations for next week are:
Leave FX alone
Stand aside from precious metals on the long side
Sell risk on strength
Continue accumulating the 30 Year Bond.
 
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.