Weekly Fundamentals - 19 February 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report three weeks ago we wrote:
"Not much in the way of COT changes except to reiterate our short term bearish stance on the commodity backed currencies as we move to slightly bearish on the AUD. This means that we are now bearish on all the commodity backed currencies.
Risk remains well bid as market participants continue to view Trump's administration as being business friendly. This euphoric situation needs to be taken advantage of.
Follow the fortunes of the YEN very carefully. Any meaningful strength means that the Carry Trade is being unwound which will be the precursor for the correction in risk we anticipate is relatively close at hand.
 
Therefore our recommendations for next week are:
Continue trading USD from the long side especially against the commodity currencies but be prepared to exit the trade on negative USD/YEN movement
Our recommendations from last week remain the same:
Stand aside from precious metals on the long side
Sell risk on strength
Continue accumulating the 30 Year Bond."
 
Now let's see how we fared on our recommendations:
Trading the USD on the long side was only very marginally in the money. Early strength in the week was met by selling and only a rally on Friday saved our recommendation
Both gold and silver moved very slightly higher so this was not a good call
A great week in which to continue selling risk into strength as new highs were attained
The 30 Year Bond a closed virtually unchanged on the week.
 
A poor week for us.
 
A very quiet week in terms of data.
 
USD:The US$ Index closed very slightly higher last week.
On Wednesday we have the FOMC Meeting Minutes.
On Thursday we have Crude Oil Inventories and the usual Unemployment Claims figure estimated to rise from 239,000 to 242,000.
COT data shows that large commercials marginally decreased their net short position in the US$ Index from -53,336 to -52,912 last week. We therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO fell slightly against the USD last week.
There is no data for the EURO this week.
COT data for the Euro shows that large commercials increased their net long position from +48,855 to +57,439 last week. We therefore remain NEUTRAL.
 
GBP: The GBP closed slightly lower against the USD last week.
Only one item for the GBP next week which is the GDP number on Wednesday expected to remain unchanged at 0.6%.
COT data shows that large commercials slightly decreased their net long position from +75,079 to +73,627 last week. We therefore remain SLIGHTLY BULLISH.
 
YEN: The YEN rose very against the USD last week.
There is no data for the YEN this week.
COT data shows that large commercials decreased their net long position from +79,022 to +75,506 last week. We therefore remain BULLISH.
 
AUD: The AUD fell very marginally against the USD last week.
On Monday we have the Monetary Policy Meeting Minutes.
On Tuesday the RBA Governor speaks.
Wednesday sees the release of Private Capital Expenditure which is expected to improve from -4.0% to -0.4%.
Finally on Thursday the RBA Governor speaks again.
COT data shows that large commercials increased their net short position from -25,435 to -32,507. We therefore remain SLIGHLTY BEARISH.
 
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 rose last week. Large commercials decreased their net short position from -36,345 to -23,299 last week. We therefore remain BEARISH.
RUSSELL2000: The RUSSELL2000 rose last week. Large commercials very slightly increased their net short from -57,051 to -57,592 last week. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 rose last week. Large commercials decreased their net short position from -92,001 to -86,341 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose very slightly last week. Large commercials slightly decreased their net short position from -134,146 to -127,788 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 very slightly last week. Large commercials slightly increased their net short position from -92,712 to -99,027 last week. We therefore remain BEARISH.
COPPER: COPPER fell strongly last week closing near its high. Copper is an important metal as it is a leading indicator for many commodities. Large commercial slightly decreased their net short position from -54,662 to -48,517 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 slightly lower last week. Large commercials slightly increased their net short position from -504,483 to -526,417 last week. This continues to be a 52 week extreme. We therefore remain BEARISH.
 
The gold:silver ratio increased from 68.76 to 68.78 indicating very slight silver underperformance last week.

DEBT:
US 30 YEAR BOND: The BOND fell very slightly last week. Large commercials increased their net long position from +76,916 to +81,580 last week. We therefore remain BULLISH.

OTHER FX:
CAN$: The CAN$ fell last week. Large commercials substantially increased their net short position from -18,938 to -28,193 last week. We therefore remain SLIGHTLY BEARISH.
NZD: The NZD fell last week. Large commercials increased their net short position from -3,661 to -5,058 last week. This is close to a 52 week low. We therefore remain BEARISH.

THOUGHTS FOR NEXT WEEK
We continue to be bearish on the commodity backed currencies.
We continue to remain bullish on the YEN.
We stay wary of risk and continue selling into strength.
Gold is becoming interesting as a small long play.
We like the 30 Year Bond.

Therefore our recommendations for next week are:
Start accumulating gold slowly
Continue selling risk especially if YEN shows accelerated signs of strength
Stay wary of the commodity backed currencies
Continue accumulating the 30 Year Bond.
 
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