Weekly Fundamentals - 25 February 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report three weeks ago we wrote:
"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."

Now let's see how we fared on our recommendations:
Accumulating gold was a bold and good move
Selling of risk especially if YEN appreciates continues to be a good idea
Staying wary of commodity backed currencies resulted in a non event as the CAD, AUD and NZD all closed virtually unchanged
Buying the 30 Year Bond was a good call as it rallied strongly.
 
Overall a good week.
 
A very quiet week in terms of data.
 
USD: The US$ Index closed slightly higher last week.
A busy week for the USD.
On Monday we have Core Durable Goods which measures the change in the total value of new purchase orders placed with manufacturers for durable goods, excluding transportation items. It is expected to remain unchanged at 0.5%.
On Tuesday we have GDP thought to rise from 1.9% to 2.1% and Consumer Confidence anticipated to decline slightly from 111.8 to 111.1.
On Wednesday we start with Manufacturing PMI thought to make a marginal increase from 56 to 56.1 followed by Crude Oil Inventories.
Thursday we have the usual Unemployment Claims figure estimated to rise slightly from 244,000 to 245,000.
Finally on Friday we have Non-Manufacturing PMI expected to rise from 56.5 to 56.6. Finally the FED Chairperson speaks.
COT data shows that large commercials marginally decreased their net short position in the US$ Index from -52,912 to -51,786 last week. We therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO fell 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 +57,439 to +64,249 last week. We therefore remain NEUTRAL.
 
GBP: The GBP closed slightly higher against the USD last week.
A quiet week in terms of data.
On Wednesday we have Manufacturing PMI which is thought to decline slightly from 55.9 to 55.7.
Thursday sees Construction PMI also thought to decline slightly from 52.2 to 52.1
Finally on Friday we have Services PMI also expected to decline from 54.5 to 54.2.
COT data shows that large commercials slightly increased their net long position from +73,627 to +74,852 last week. We therefore remain SLIGHTLY BULLISH.
 
YEN: The YEN rose very against the USD last week.
There is only one item for the YEN this week which is Household Spending on Thursday. It is expected to remain unchanged at -0.3%.
COT data shows that large commercials slightly decreased their net long position from +75,506 to +74,141 last week. We therefore remain BULLISH.
 
AUD: The AUD rose very marginally against the USD last week.
Only one item for the AUD this week which is GDP on Tuesday thought to be +0.7% from the previous -0.5%.

COT data shows that large commercials increased their net short position from -32,507 to -41,636. We therefore remain SLIGHLTY BEARISH.
 
CNY: Two items for the CNY this week both on Tuesday.
Manufacturing PMI is expected to be 51.2 from the previous 51.3. This is followed by Non-Manufacturing PMI.
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 -23,299 to 21,307 last week. We therefore remain BEARISH.
RUSSELL2000: The RUSSELL2000 fell slightly last week. Large commercials decreased their net short from -57,592 to -46,497 last week. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 rose last week. Large commercials decreased their net short position from -86,341 to -75,926 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose strongly last week. Large commercials slightly increased their net short position from -127,788 to -139,564 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 strongly last week. Large commercials slightly increased their net short position from -99,027 -102,233 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 commercial slightly decreased their net short position from -48,517 to -47,918 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 higher last week. Large commercials substantially increased their net short position from -526,417 to -571,785 last week. This continues to be a 52 week extreme. We therefore alter our view from BEARISH to VERY BEARISH.
 
The gold:silver ratio increased from 68.78 to 68.61 indicating very slight silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose last week. Large commercials substantially decreased their net long position from +81,580 to +54,594 last week. We therefore alter our view from BULLISH to SLIGHTLY BULLISH.

OTHER FX:
CAN$: The CAN$ fell slightly last week. Large commercials increased their net short position from -28,193 to -32,520 last week. We therefore remain SLIGHTLY BEARISH.
NZD: The NZD rose very slightly last week. Large commercials decreased their net short position from -5,058 to -4,871 last week. This remains close to a 52 week low. We therefore remain BEARISH.

THOUGHTS FOR NEXT WEEK
Little change as from last week with exception that we turn slightly less bullish on the 30 YEAR BOND after its recent rally.
We continue to dislike risk and like precious metals especially gold. This needs to be bought on weakness which we anticipate we will see in the early part of next week.

Therefore our recommendations for next week are:
Continue accumulating gold slowly on weakness
Continue selling risk especially if YEN shows accelerated signs of strength
Only continue buying the 30 year bond is risk falls.

 
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