Weekly Fundamentals - 16 July 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
 
In conclusion to our report last week we wrote:
“A number of significant COT changes this week.
The USD continues to fail to make new highs.
This continues to bode well for precious metals in the medium to long term.
COT for precious metals improved substantially.
COT data for the commodity backed currencies showed deterioration.
COT data for risk indicates caution.
 
Therefore our recommendations based on our COT readings for next week are as follows:
Continue accumulating precious metals on dips
Continue selling the AUD and NZD into any strength
Sell the CAN $
Sell the GBP
Sell the EURO
Stay away from risk
The USD Index may continue to experience a corrective bounce.”
 
Now let's see how we fared on our recommendations:
Accumulating precious metals was an excellent call
Selling the above currencies against the USD was given a great opportunity last week
The USD did not experience a corrective bounce.
 
A very average week.
 
A full week of data.
 
USD:The US$ Index closed sharply lower last week.
On Wednesday we start with Building Permits expected to rise from 1.17M to 1.20M. This is followed by Crude Oil Inventories.
On Thursday we have the usual Unemployment Claims number expected at 245,000 from the previous 247,000.
COT data shows that large commercials decreased their net short position in the US$ Index from -10,699 to -6,954. This is now a 52 week extreme so we therefore alter our view from NEUTRAL to SLIGHTLY BULLISH.
 
EURO:The EURO closed sharply higher against the USD last week.
The Minimum Bid Rate on Thursday is expected to remain at 0.00%. This is then followed by the ECB Press Conference.
COT data for the Euro shows that large commercials increased their net short position last week from -100,041 to 108,005. This is a 52 week low so we remain VERY BEARISH.
 
GBP:The GBP closed sharply higher against the USD last week.
On Tuesday we have CPI thought to remain unchanged at 2.9%. The BOE Governor speaks.
On Thursday we have Retail sales expected to rise from -1.2% to 0.3%.
COT data shows that large commercials significantly decreased their net long position from +24,751 to +22,994 last week. This continues to be a 52 week low so we remain BEARISH.
 
YEN:The YEN closed sharply higher against the USD last week.
A busy week for the YEN.
Wednesday is busy. We start with the Monetary Policy Statement. This is followed by the BOJ Outlook Report and the BOJ Policy Rate anticipated to remain unchanged at -0.1%. Finally we finish with the BOJ Press Conference.
COT data shows that large commercials sharply increased their net long position from +98,183 to +133,152 last week. This continues to be a 52 week extreme. We therefore remain BULLISH.
 
AUD:The AUD closed very sharply higher against the USD last week.
On Monday we have the Monetary Policy Meeting Minutes.
On Wednesday we have the Employment Change data thought to be 15,300 from the previous 42,000. This is followed by the Unemployment rate expected to rise slightly from 5.5% to 5.6%.
COT data shows that large commercials increased their net short position from -38,910 to -41,966 last week. We therefore remainto BEARISH.
 
CNY: Four items for the CNY this week.
On Sunday we have GDP thought to be 6.8% from 6.9% followed by Industrial Production expected to remain unchanged at 6.5%. We then have Fixed Asset Investment expected to dip slightly from 8.6% to 8.5%.
Finally we have the NBS 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 closed sharply higher last week. Large commercials increased their net short position from -26,227 to -28,697. We therefore remain SLIGHTLY BEARISH.
RUSSELL2000: The RUSSELL2000 closed sharply higher last week. Large commercials net long position of +8,535 remained unchanged last week. We therefore remain NEUTRAL.
NASDAQ100:The NASDAQ100 closed sharply higher last week closing on its highs. Large commercials decreased their net short position from -40,695 to -24,806 last week. We therefore alter our view from BEARISH to SLIGHTLY BEARISH.
VIX: VIX closed sharply lower last week.
Large commercials slightly decreased their protection last week decreasing their net long position from +123,327 to +112,696. This remains close to a 52 week extreme so remain BULLISH on risk protection and BEARISH on risk.
 
COMMODITIES:
GOLD: GOLD rose sharply last week. Large commercials decreased their net short position from -107,226 to -73,916 last week. This is a 52 week extreme. Now that large commercials hold a net short position which is lower than 200,000 and it is at a 52 week extreme we alter our view from SLIGHTLY BULLISH to VERY BULLISH.
SILVER: SILVER rose sharply last week. Large commercials decreased their net short position from -39,228 to -24,567 last week. This is a 52 week extreme. We therefore alter our view from SLIGHTLY BULLISH to VERY BULLISH.
COPPER: COPPER rose sharply last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials slightly decreased their net short position from -17,521 to -14,901 last week. Large commercials generally carry a net neutral position. This is no longer a neutral position. We therefore remain SLIGHTLY BEARISH.
CRUDE OIL: CRUDE fell marginally last week. Large commercials increased their net short position from -338,146 to -361,371 last week. We therefore remain SLIGHTLY BEARISH.
 
The gold:silver ratio decreased from 77.85 to 76.98 indicating silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose reasonably last week. Large commercials substantially decreased their net short from -72,662 to -34,353 last week. We therefore alter our view from BEARISH to SLIGHTLY BEARISH.
 
OTHER FX:
CAN$: The CAN$ rose very strongly against the USD last week. Large commercials substantially decreased their net long position from +32,293 and are now net short -6,631 last week. We therefore alter our view from SLIGHTLY BEARISH to BEARISH.
NZD:The NZD rose strongly against the USD last week. Large commercials increased their net short position from -31,299 to -33,355 last week. This remains a 52 week extreme and we therefore remain VERY BEARISH.
AUD/YEN:The AUD rose sharply in this pair. COT data for the AUD showed deterioration for the AUD and good improvement for the YEN last week. This bodes badly for risk in the short term.
 
THOUGHTS FOR NEXT WEEK
A number of COT changes this week.
The USD continues to fail to make new highs.
This continues to bode well for precious metals in the medium to long term.
COT for precious metals continue to improve.
COT data for the commodity backed currencies continue to show deterioration.
COT data for risk indicates caution.
 
Therefore our recommendations based on our COT readings for next week are as follows:
Continue accumulating precious metals on dips
Continue selling the AUD and NZD into any strength
Sell the CAN $
Sell the GBP
Sell the EURO
Stay away from risk
 
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