Weekly Fundamentals - 24 June 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.
Not too many changes this week. So we remain of the view similarly to last week that:
precious metals are most vulnerable at this stage.
both GBP and EURO should move lower and start the corrective move lower in the precious metals.
Nothing much has changed.
 
Therefore our recommendations for next week are:
Retain shorts in precious metals.
Begin to take profits on risk long positions.
Begin to buy VIX on any dips towards 10.
Remain short both the EURO and GBP.”
 
Now let's see how we fared on our recommendations:
Retaining shorts in precious metals was slightly wrong as both moved very slightly higher
Taking profits on risk was good as the S&P fell reasonably strongly
Buying VIX close to 10 was given a further opportunity
Remaining short both the EURO and GBP was good as both fell slightly.
 
An Indifferent week.
 
Little in the way of data but reasonable Central bank activity next week.
 
USD:The US$ Index closed slightly higher last week.
On Monday we have Core Durable Goods Orders expected to rise from -0.5% to 0.4%.
On Tuesday we have Consumer Confidence thought to dip slightly from 117.9 to 116.2 and the FED Chairperson speaks.
On Wednesday we see Crude Oil Inventories.
On Thursday we have GDP expected to be unchanged at 1.2% and the usual unemployment Claims expected at 240,000 from the previous 241,000.
COT data shows that large commercials significantly decreased their net short position in the US$ Index from -33,935 to -11,297. We therefore alter our view from SLIGHTLY BEARISH to NEUTRAL.
 
EURO:The EURO closed slightly lower against the USD last week.
There is no data for the EURO this week.
However on Monday, Tuesday and Wednesday the president of the ECB speaks.
COT data for the Euro shows that large commercials decreased their net short position last week from -89,928 to -60,155. This is no longer close to a 52 week extreme and we therefore alter our view from VERY BEARISH to BEARISH.
 
GBP:The GBP closed reasonably lower against the USD last week.
On Tuesday we have the BOE Stability report and the BOE Governor speaks.
The Governor continues speaking on Wednesday.
On Friday we have the Current Account figure which is thought to widen from -12.1B to 16.6B.
COT data shows that large commercials decreased their net long position from +43,892 to +42,276 last week. This continues to remain near a 52 week extreme so we remain NEUTRAL.
 
YEN:The YEN closed reasonably lower against the USD last week.
On Wednesday the BOJ Governor speaks.
COT data shows that large commercials increased their net long position from +60,896 to 68,012 last week. We therefore remain BULLISH.
 
AUD:The AUD closed reasonably weaker against the USD last week.
There is no data for the AUD this week.
COT data shows that large commercials decreased their net long position from +6,525 and are now net short -14,197 last week. We therefore alter our view from SLIGHTLY BULLISH to SLIGHTLY BEARISH.
 
CNY: There are two items for the CNY this week.
On Thursday we have both Manufacturing and Non-Manufacturing PMI. The former is expected to fall slightly from 51.2 to 51.0 whilst the latter is expected to remain unchanged at 54.2.
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 sharply last week. Large commercials substantially decreased their net short position from -7,684 and are now net long +37,234 last week. We therefore remain SLIGHTLY BULLISH.
RUSSELL2000: The RUSSELL2000 rose very slightly last week. Large commercials very significantly decreased their net short from -6,888 and are now net long +6,231 last week. We therefore remain NEUTRAL.
NASDAQ100:The NASDAQ100 rose strongly last week. Large commercials decreased their net short position from -104,816 to -78,769 last week. We therefore remain BEARISH.
VIX: VIX fell sharply last week.
Large commercials increased their protection last week increasing their net long position from +131,539 to +142,424. This is very close to a 52 week extreme so remain BULLISH on risk protection and BEARISH on risk.
 
COMMODITIES:
GOLD: GOLD rose slightly last week. Large commercials decreased their net short position from -203,611 to -165,016 last week. Now that large commercials hold a net short position which is lower than 200,000 we alter our view from BEARISH to NEUTRAL.
SILVER: SILVER rose very slightly last week. Large commercials decreased their net short position from -71,913 to -58,834 last week. We therefore remain NEUTRAL.
COPPER: COPPER rose sharply last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials decreased their net short position from -20,597 to -14,123 last week. Large commercials generally carry a net neutral position. This is no longer a neutral position. We therefore remai nSLIGHTLY BEARISH.
CRUDE OIL: CRUDE fell last week. It has now fallen for 5 weeks in a row. Large commercials decreased their net short position from -376,005 to -359,714 last week. We therefore remain SLIGHTLY BEARISH.
 
The gold:silver ratio increased from 75.10 to 75.34 indicating slight silver underperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose sharply last week. Large commercials increased their net short from -69,888 to -85,475 last week. This is now a 52 week extreme. We therefore remain BEARISH.
 
OTHER FX:
CAN$: The CAN$ fell reasonably against the USD last week. Large commercials decreased their net long position from +98,093 to +85,766 last week. This is no longer close to a 52 week extreme and we thereforealter our view from VERY BULLISH to BULLISH.
NZD:The NZD rose against the USD last week. The NZD has now risen for 6 weeks in a row. Large commercials significantly increased net short position from -2,343 to -22739 last week. This is a 52 week extreme and we therefore alter our view from NEUTRAL t oVERY BEARISH.
AUD/YEN:The AUD fell in this pair. COT data for the AUD showed a meaningful deterioration for the AUD and an improvement for the YEN last week. This bodes badly for risk in the short term.
 
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.
A number of changes in COT readings this week.
COT for precious metals has improved.
COT for both the AUD and NZD have significantly deteriorated.
COT for the 30 YEAR BOND is beginning to look worrying.
 
Therefore our recommendations for next week are:
Cover shorts on precious metals and slowly accumulate on dips
Short both the AUD and NZD. Particularly the NZD.
Risk is to be neither sold nor bought at this stage.
Continue accumulating VIX on any dips towards/below 10.
 
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