Weekly Fundamentals - 31 March 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report three weeks ago we wrote:
"The USD continues to fail to make new highs
This bodes well for precious metals in the medium to long term
COT changes this week reflect this as improvements in the commodity currencies indicate
The 30 YEAR BOND continues to point to risk weakness.
 
Therefore our recommendations for next week are:
Continue accumulating gold slowly on weakness
Sell risk outright
But the commodity backed currencies
Buy the 30 YEAR BOND on any weakness."

Now let's see how we fared on our recommendations:
Accumulating gold on weakness was good as it moved very slightly higher
Selling risk was neither here nor there as the S&P500 moved higher by a whisker
Buying the commodity backed currencies was clever as both the AUD and CAN$ inched higher and the NZD was virtually unchanged
The week provided ample opportunity to buy the 30 YEAR BOND as it weakened.
 
A good week.
 
A busy week ahead in terms of data especially for the AUD and the USD and as it is the first week of the month than therefore the first Friday we have the US unemployment data to look forward to.
 
USD: The US$ Index closed up reasonably well last week.
A very busy week in terms of data.
On Monday we have the Manufacturing PMI figure thought to decline from 57.7 to 57.2.
Wednesday we have the Non-Manufacturing PMI also expected to decline from 57.6 to 571. This is followed by Crude Oil Inventories and the FOMC Meeting Minutes.
On Thursday we have the usual Unemployment Claims figure estimated to fall from 258,000 to 251,000.
Friday is the big day. Average Hourly Earnings is expected to remain static at 0.2%, Non-Farm Payroll  is expected to fall substantially from 235,000 to 176,000 and the Unemployment Rate is anticipated to remain at 4.7%.
COT data shows that large commercials decreased their net short position in the US$ Index from -53,012 to -49,852 last week. We therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO fell 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 +16,094 to +5,932 last week. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP closed slightly higher against the USD last week.
We start on Monday with Manufacturing PMI expected to rise from 54.6 to 55.1.
On Tuesday we have Construction PMI expected to remain static at 52.5.
Wednesday is the last in the series with Services PMI thought to rise slightly from 53.3 to 53.5.
Finally on Friday we have Manufacturing Production estimated to rise from -0.9% to 0.3%.
COT data shows that large commercials substantially slightly decreased their net long position from -119,871 to +111,206 last week. This remains close to a 52 week high and we therefore remain BULLISH.
 
YEN: The YEN rose reasonably against the USD last week.
There are two items for the YEN this week both on Monday.
The manufacturing Index is expected to rise from 10 to 14 and the Non-Manufacturing Index is expected to rise from 18 to 19.
COT data shows that large commercials decreased their net long position from +89,475 to +70,829 last week. We therefore remain BULLISH.
 
AUD: The AUD fell strongly against the USD last week.
A busy week for the AUD.
On Sunday night we have Retail Sales expected to fall from 0.4% to 0.3%.
Monday sees the release of the Trade balance number thought to be 1.75B from the previous 1.20B.
Tuesday we have the Cash Rate which is the interest rate charged on overnight loans between financial intermediaries and is thought to remain at 1.50%. This is followed by the RBA Governor speaking.
COT data shows that large commercials increased their net short position from -55,683 to -58,222. This is close to a 52 week extreme. We therefore remain BEARISH.
 
CNY: Two items for the CNY this week.
On Saturday we have both CPI and PPI. As I write there is no data for either.
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 a little last week. Large commercials substantially increased their net short position from -76,170 to -143,259 last week. We therefore alter our view from BEARISH back to VERY BEARISH.
RUSSELL2000: The RUSSELL2000 rose strongly last week. Large commercials increased their net long position from +39,779 to +51,620 last week. We therefore alter our view from NEUTRAL to SLIGHTLY BULLISH.
NASDAQ100: The NASDAQ100 rose strongly last week. Large commercials increased their net short position from -81,287 to -87,645 to - last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose very marginally last week. Large commercials increased their net short position from -128,997 to -152,114 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 increased their net short position from -93,734 to -101,767 last week. We therefore remain BEARISH.
COPPER: COPPER rose very marginally 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 -25,857 to -29,643 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 strongly last week. Large commercials decreased their net short position from -433,437 to -410,089 last week. We therefore remain VERY BEARISH.
 
The gold:silver ratio slightly decreased from 70.10 to 68.51 indicating very strong silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND fell reasonably hard last week. Large commercials substantially decreased their net long position from +86,069 to +51,083 last week. We therefore alter our view from BULLISH to SLIGHTLY BULLISH.

OTHER FX:
CAN$: The CAN$ rose marginally last week. Large commercials meaningfully increased their net long position from +32,464 to +36,441 last week. We therefore remain SLIGHTLY BULLISH.
NZD: The NZD rose marginally last week. Large commercials increased their net long position from +5,403 to +13,500 last week. We therefore alter our view from NEUTRAL to SLIGHTLY BULLISH.
AUD/YEN: The AUD rose slightly in this pair. COT for the AUD very slightly worsened and also worsened for the YEN indicating that the bias is very, very slightly in favour of risk at this time.

THOUGHTS FOR NEXT WEEK
The USD continues to fail to make new highs
This bodes well for precious metals in the medium to long term
COT changes this week slightly favour risk at this time providing us with a golden chance to slowly continue accumulating the precious metals and selling into further risk strength.
 
Therefore our recommendations for next week are:
Continue accumulating gold slowly on weakness
Sell risk on any further strength
Buy the commodity backed currencies
Buy the 30 YEAR BOND on any weakness
We are emboldened enough to predict a 20% in risk over the following summer months.
 
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