Weekly Fundamentals - 03 March 2017

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

Now let's see how we fared on our recommendations:
Plenty of opportunity to accumulate gold throughout the week so we would regard this as a good call
Selling of risk was provided plenty of opportunities
Our view on the 30 year Bond was that we liked it less due to its recent rally and that it should only be bought if risk falls. A good call.
 
Overall a good week in which to add to positions in long gold and short risk.
 
A very quiet week in terms of data culminating in the US employment data on Friday.
 
USD: The US$ Index closed slightly higher last week.
We start on Wednesday with Crude Oil Inventories.
On Thursday we have the usual Unemployment Claims figure thought to be 239,000 from the previous 223,000.
Friday is the big day.
Average Hourly Earnings is anticipated to rise from 0.1% to 0.3%.
NonFarm Payroll is expected to fall from 227,000 to 185,000.
Unemployment rate is expected to improve from 4.8% to 4.7%.
COT data shows that large commercials marginally decreased their net short position in the US$ Index from -51,786 to -51,199 last week. We therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO rose very slightly against the USD last week.
On Thursday we have the Minimum Bid rate which is the interest rate on the main refinancing operations that provide the bulk of liquidity to the banking system and the ECB Press Conference.
COT data for the Euro shows that large commercials decreased their net long position from +64,249 to +58,524 last week. We therefore remain NEUTRAL.
 
GBP: The GBP closed strongly lower against the USD last week.
On Wednesday we have the Annual Budget Release.
On Friday we have Manufacturing Production expected to decline steeply from +2.1% to -0.6%.
COT data shows that large commercials slightly increased their net long position from +74,852 to +79,822 last week. We therefore remain SLIGHTLY BULLISH.
 
YEN: The YEN fell strongly against the USD last week.
On Tuesday we have the GDP number which is thought to rise from 0.2% to 0.4%.
Thursday sees the release of the Manufacturing Index anticipated to improve from 7.5 to 8.4.
COT data shows that large commercials slightly decreased their net long position from +74,141 to +73,260 last week. We therefore remain BULLISH.
 
AUD: The AUD fell strongly against the USD last week.
On Sunday night we have retail sales expected to rise from -0.1% to +0.4%
On Monday we have the Cash Rate which is the interest rate charged on overnight loans between financial intermediaries and the RBA Rate Statement.
COT data shows that large commercials increased their net short position from -41,636 to -58,061. We therefore remain SLIGHLTY BEARISH.
 
CNY: Three items for the CNY this week.
On Tuesday we should see the trade Balance number estimated to fall from 355B to 173B.
On Wednesday we have both CPI and PPI. The former is thought to decline from 2.5% to 1.9% and the latter is anticipated to rise from 6.9% to 7.6%.
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 increased their net short position from +21,307 and are now net short -72,978 last week. We therefore remain BEARISH.
RUSSELL2000: The RUSSELL2000 fell slightly last week. Large commercials decreased their net short from -46,497 to -26,298 last week. We therefore remain BEARISH.
NASDAQ100: The NASDAQ100 rose slightly last week. Large commercials increased their net short position from -75,926 to -83,638 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD fell strongly last week. Large commercials substantially increased their net short position from -139,564 to -179,907 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 fell strongly last week. Large commercials slightly increased their net short position from -102,233 to -108,010 last week. We therefore remain BEARISH.
COPPER: COPPER fell strongly 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 -47,918 to -42,726 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 decreased their net short position from -571,785 to -546,016 last week. This continues to be a 52 week extreme. We therefore remain VERY BEARISH.
 
The gold:silver ratio increased from 68.61 to 68.81 indicating very slight silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND fell strongly last week. Large commercials decreased their net long position from +54,594 to +48,904 last week. We therefore remain SLIGHTLY BULLISH.

OTHER FX:
CAN$: The CAN$ fell strongly last week. Large commercials increased their net short position from -32,520 to -37,625 last week. We therefore remain SLIGHTLY BEARISH.
NZD: The NZD fell strongly last week. Large commercials increased their net short position from -4,871 to -5,341 last week. This remains close to a 52 week low. We therefore remain BEARISH.

THOUGHTS FOR NEXT WEEK
Not much in the way of changes in our COT readings with the exception of the large increase in the net short for gold. However as long as large commercials remain below -200,000 net short we feel justified in remaining slightly bullish. However this reading does perhaps bode well for risk at least in the short term.
This week hinges on Friday's employment data and the usual Trump soundbites.
 
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
Sell crude.
 
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