Weekly Fundamentals - 17 March 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report three weeks ago we wrote:
"What a difference a week makes.
Whilst the last few weeks have witnessed very few changes in our COT readings this week we have a number.
This week is also important as we have a number of Central banks making noise, the most important one being the FED on Wednesday.
A rate hike is widely expected and so therefore the wording is far more important. Are we potentially heading for another 3 hikes this year?
Risk at its all time high needs to beware.
 
Therefore our recommendations for next week are:
Continue accumulating gold slowly on weakness
Sell risk outright
Buy the GBP
Sell crude.

Now let's see how we fared on our recommendations:
Accumulating gold was the right call
Selling risk outright was ok as the S&P500 only very marginally moved higher
Buying the GBP was a very good call
Crude moved very marginally higher so this was slightly wrong.
 
Another good week.
 
An extremely quiet week after last week's FED interest rate hike.
 
USD: The US$ Index closed substantially lower last week.
A very quiet week in terms of data.
last week we wrote that the wording of the FED statement would be more important than the hike itself which was universally anticipated. Long gone are the days when central banks surprised us! The wording was benign with only another 2 hikes in the pipeline for the rest of the year.
On Wednesday we have Crude Oil Inventories.
On Thursday we have Unemployment Claims expected to be 240,000 from the previous 241,000 and the FED Chairperson speaks.
On Friday we have Core Durable Goods Orders thought to rise from 0.0% to 0.5%.
COT data shows that large commercials decreased their net short position in the US$ Index from -58,486 to -54,314 last week. We therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO rose strongly against the USD last week.
There is no data for the EURO this week.
COT data for the Euro shows that large commercials substantially decreased their net long position from +66,771 to +37,613 last week. We therefore remain NEUTRAL.
 
GBP: The GBP closed higher against the USD last week.
We start on Tuesday with CPI thought to be 2.1% from 1.8%.
On Thursday we have Retail Sales anticipated to move from -0.3% to 0.4%.
COT data shows that large commercials substantially increased their net long position from +92,337 to +122,119 last week. This is now a 52 week high and we therefore remain BULLISH.
 
YEN: The YEN rose strongly against the USD last week.
There is no data for the YEN this week.
COT data shows that large commercials increased their net long position from +84,847 to +99,742 last week. We therefore remain BULLISH.
 
AUD: The AUD rose strongly against the USD last week.
One item for the AUD this week.
On Monday we have the Monetary Policy Meeting Minutes.
COT data shows that large commercials slightly decreased their net short position from -55,374 to -45,488. We therefore remain SLIGHTLY 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 very slightly last week. Large commercials increased their net short position from -137,948 to -163,933 last week which is very close to a 52 week high. We therefore remain VERY BEARISH.
RUSSELL2000: The RUSSELL2000 rose last week. Large commercials increased their net long position from +2,118 to +19,416 last week. We therefore remain NEUTRAL.
NASDAQ100: The NASDAQ100 rose last week. Large commercials increased their net short position from -74,902 to -76,105 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose last week. Large commercials decreased their net short position from -152,648 to -123,287 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 decreased their net short position from -105,862 to -97,999 last week. We therefore remain BEARISH.
COPPER: COPPER rose strongly last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercial decreased their net short position from -36,369 to -26,618 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 marginally last week. Large commercials decreased their net short position from -535,499 to -447,406 last week. We therefore remain VERY BEARISH.
 
The gold:silver ratio increased from 70.77 to 70.74 indicating very marginal silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose very strongly last week. Large commercials substantially increased their net long position from +72,235 to +99,537 last week. This is now a 52 week extreme and we therefore remain BULLISH.

OTHER FX:
CAN$: The CAN$ rose last week. Large commercials meaningfully decreased their net short position from -28,459 to -12,786 last week. We therefore remain alter our view from SLIGHTLY BEARISH to NEUTRAL.
NZD: The NZD rose last week. Large commercials increased their net long position from +2,252 to +5,403 last week. We therefore remain NEUTRAL.
AUD/YEN: This week we are adding the AUD/YEN cross rate to our analysis, please see our reasoning below. Even though there is no COT data for this pair we will base our recommendation by analyzing both individual currency COTS and thereby creating a hybrid COT. COT for the AUD slightly improved as did the COT for YEN. We therefore instigate our analysis of this pair as NEUTRAL.

THOUGHTS FOR NEXT WEEK
The FED rate hike came and went with no fanfare. The FED announcement was benign with the possibility of no more than a further two hikes this year. Both bonds and risk liked it, but which liked it more?
Bonds liked it more. COT for the S&P500 worsened whilst for the 30 Year Bond improved substantially.
We have started following the AUD/YEN cross rate. This cross is a very good barometer of how healthy the market perceives risk. The AUD is a commodity backed currency whilst the YEN has been the currency of choice for the 'carry trade' whereby traders borrow a cheap currency (the YEN with its long standing negative rates) and invest in risk elsewhere. If/when the YEN makes a substantial rise higher it bodes ill for risk. This is especially true if it moves aggressively higher against the AUD which as an exporter of natural resources will bear the brunt of any economic slowdown.
 
Therefore our recommendations for next week are:
Continue accumulating gold slowly on weakness
Sell risk outright
Buy the GBP
Watch the AUD/YEN cross rate very closely.
 
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.