Weekly Fundamentals - 10 April 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 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."
 
Now let's see how we fared on our recommendations:
Accumulating gold slowly continued to be a good trade
Selling risk into strength was also good
Buying the commodity backed currencies was not good
We were given another opportunity to buy the 30 YEAR BOND
 
An average week.
 
A quiet week generally.
 
USD: The US$ Index closed up convincingly last week.
On Monday the FED Chairperson speaks.
On Wednesday we have Crude Oil Inventories.
Thursday sees PPI expected to fall from 0.3% to 0.0%.
This is followed by the usual Unemployment Claims figure which is thought to rise from 234,000 to 242,000.
Consumer Sentiment follows and is expected to rise from 96.9 to 97.1.
On Friday we have CPI and Core CPI. The former is anticipated to decline to 0.0% from 0.1% whilst the latter is expected to remain unchanged at 0.2%.
Both Core Retail Sales and Retail Sales are estimated to remain unchanged at 0.2% and 0.1% respectively.
COT data shows that large commercials slightly decreased their net short position in the US$ Index from -49,852 to -48,371 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 increased their net long position from +5,932 to +7,097 last week. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP closed fell strongly against the USD last week.
On Tuesday we have CPI anticipated to fall from 2.3% to 2.2%.
On Wednesday the BOE Governor speaks and we have the Average Earning Index estimated to fall from 2.2% to 2.1%.
COT data shows that large commercials slightly decreased their net long position from +111,206 to 106,872 last week. This remains close to a 52 week high and we therefore remain BULLISH.
 
YEN: The YEN rose very slightly against the USD last week.
There s no data for the YEN this week.
COT data shows that large commercials decreased their net long position from +70,829 to +60,206 last week. We therefore alter our view from BULLISH to SLIGHTLY BULLISH.
 
AUD: The AUD fell strongly against the USD last week.
On Wednesday we have the Employment Change figure estimated to rise dramatically from -6,400 to 20,300 and the Unemployment Rate figure thought to remain unchanged at 5.9%.
COT data shows that large commercials slightly decreased their net short position from -58,222 to -55,260. This continues to be close to a 52 week extreme. We therefore remain BEARISH.
 
CNY: Three items for the CNY this week.
On Tuesday we have both CPI and PPI. The former is thought to have risen from 0.8% to 1.1% whilst the latter is anticipated to fall from 7.8% to 7.4%.
On Wednesday we have the Trade balance figure expected to rise dramatically from -60B to +76B as measured on a monthly basis.
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 fell very slightly last week. Large commercials substantially decreased their net short position from -143,259 to -80,200 last week. We therefore alter our view from VERY BEARISH to BEARISH.
RUSSELL2000: The RUSSELL2000 fell reasonably last week. Large commercials decreased their net long position from +51,620 to +44,519 last week. We therefore remain SLIGHTLY BULLISH.
NASDAQ100: The NASDAQ100 fell slightly last week. Large commercials increased their net short position from -87,645 to -93,038 to - last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose very marginally last week. Large commercials increased their net short position from -152,114 to -171,016 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 increased their net short position from -101,767 to -112,346 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 commercials very slightly increased their net short position from -29,643 to -29,883 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 strongly last week. Large commercials slightly decreased their net short position from -410,089 to -405,772 last week. We therefore remain VERY BEARISH.
 
The gold:silver ratio increased from 68.51 to 70.09 indicating very strong silver underperformance last week.

DEBT:
US 30 YEAR BOND: The BOND fell reasonably hard last week. Large commercials substantially decreased their net long position from +51,083 to +43,529 last week. We remain SLIGHTLY BULLISH.

OTHER FX:
CAN$: The CAN$ fell last week. Large commercials increased their net long position from +36,441 to +38,710 last week. We therefore remain SLIGHTLY BULLISH.
NZD: The NZD fell strongly last week. Large commercials increased their net long position from +13,500 to +15,412 last week. We therefore remain SLIGHTLY BULLISH.
AUD/YEN: The AUD fell strongly in this pair. COT for the AUD slightly improved and worsened for the YEN indicating that the short term bias continues to be in favour of risk at this time.

THOUGHTS FOR NEXT WEEK
The USD continues to fail to make new highs
This continues to bode well for precious metals in the medium to long term
However in the short term it would appear that risk is oversold and due for a continued move higher
Also however large commercials are once again building longs in commodity backed currencies in anticipation of a meaningful correction in risk which we continue to anticipate to be in the magnitude of 20% and to occur this summer.
 
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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