Weekly Fundamentals - 15 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 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."
 
Now let's see how we fared on our recommendations:
Accumulating gold was the right move as it rallied strongly
Buying the commodity backed currencies was also correct as the AUD and NZD rallied strongly and the CAN$ moved marginally higher
Buying the 30 YEAR BOND was a great call.
 
An excellent week.
 
A quiet week in terms of data due to the Easter holiday season.
USD: The US$ Index closed meaningfully lower last week.
On Tuesday we have Building Permits thought to be 1.25m form the previous 1.22M.
Wednesday we have Crude Oil Inventories.
On Thursday we start with the FED Manufacturing Index expected to fall from 32.8 to 25.6.
The usual Unemployment Claims figure is anticipated to rise from 234,000 to 241,000.
Finally a FED official speaks.
COT data shows that large commercials increased their net short position in the US$ Index from -48,371 to -50,086 last week. We therefore remain SLIGHTLY BEARISH.
 
EURO: The EURO rose very marginally 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+7,097 to +16,076 last week. We therefore remain SLIGHTLY BEARISH.
 
GBP: The GBP closed up reasonably well against the USD last week.
On Thursday the BOE Governor speaks.
Friday sees the release of Retail Sales thought to fall from 1.4% to -0.3%.
COT data shows that large commercials slightly increased their net long position from +106,872 to + 112,430 last week. This remains close to a 52 week high and we therefore remain BULLISH.
 
YEN: The YEN rose strongly against the USD last week.
Only one item for the YEN next week which takes place on Monday when the BOJ Governor speaks.
COT data shows that large commercials decreased their net long position from +70,829 to +60,206 last week. We therefore remain SLIGHTLY BULLISH.
 
AUD: The AUD rose strongly against the USD last week.
There is only one item for the AUD this week which is the Monetary Policy Meeting Minutes on Monday.

COT data shows that large commercials slightly decreased their net short position from -48,446 to +45,399. We therefore remain BEARISH.
 
CNY: Four items for the CNY this week all on Sunday.
GDP is expected to remain unchanged at 6.8%.
Industrial Production is anticipated to fall marginally from 6.3% to 6.2%.
Fixed Asset Investment is also thought to marginally fall from 8.9% to 8.8%.
Finally we have the National Bureau of Statistics press conference.
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 strongly last week. Large commercials increased their net short position from -80,200 to -97,335 last week. We therefore remain BEARISH.
RUSSELL2000: The RUSSELL2000 fell strongly last week. Large commercials increased their net long position from +44,519 to +56,108 last week. We therefore remain SLIGHTLY BULLISH.
NASDAQ100: The NASDAQ100 fell strongly last week. Large commercials increased their net short position from -93,038 to -97,206 last week. We therefore remain SLIGHTLY BEARISH.
 
COMMODITIES:
GOLD: GOLD rose strongly last week. Large commercials increased their net short position from -171,016 to -187,364 last week. Now that large commercials hold a net short position which is smaller than 200,000 we are slightly bullish. However as this figure is approaching the 200,000 level we alter our view slightly. We therefore alter our view from SLIGHTLY BULLISH to NEUTRAL.
SILVER: SILVER rose strongly last week. Large commercials increased their net short position from -112,346 to -114,414 last week. this is now a 52 week extreme so we alter our view from BEARISH to VERY BEARISH.
COPPER: COPPER fell strongly last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials slightly increased their net short position from -29,883 to -30,265 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 marginally last week. Large commercials increased their net short position from -405,772 to -429,398 last week. We therefore remain VERY BEARISH.
 
The gold:silver ratio decreased from 70.09 to 69.54 indicating silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose very strongly last week. Large commercials increased their net long position from +43,529 to 47,178 last week. We remain SLIGHTLY BULLISH.

OTHER FX:
CAN$: The CAN$ rose marginally last week. Large commercials very slightly decreased their net long position from +38,710 to +38,595 last week. We therefore remain SLIGHTLY BULLISH.
NZD: The NZD rose strongly last week. Large commercials very marginally increased their net long position from +15,412 to +15,970 last week. We therefore remain SLIGHTLY BULLISH.
AUD/YEN: The AUD fell in this pair. COT for the AUD slightly improved and worsened for the YEN indicating that the short term bias continues to be slightly 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 corrective move higher
Precious metals are over extended on the upside in in the short term.
 
Therefore our recommendations for next week are:
Take short term profits on precious metals
Sell risk on any further strength
Buy the 30 YEAR BOND on any weakness
We continue to predict a 20% in risk over the following summer months.
 
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