Weekly Fundamentals - 04 August 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report last week we wrote:
“A number of changes in COT this week.
The USD Index continues to fail to make new highs. This continues to bode well for precious metals in the long term.
However COT for both gold and silver warrants short term caution.
Commodity backed currencies especially the AUD, CAN$ and NZD continue to be worrying.
 
Therefore our recommendations based on our COT readings for next week are as follows:
Take short term profits on precious metals. We have had an exceptional run
Continue selling the AUD, CAN$ and NZD.
Stay away from risk.”
 
Now let's see how we fared on our recommendations:
Taking profits on the precious metals was a great call.
Continued selling of the AUD, CAN$ and NZD was also absolutely correct.
Staying away from risk was good.
 
A very good week.
 
Virtually no economic data to speak of for this week.
 
USD:The US$ Index closed up slightly last week.
On Wednesday we have Crude Oil Inventories.
On Thursday we have PPI expected to remain unchanged at 0.1%. This is followed by the usual Unemployment Claims figure estimated to be 244,000 from the previous 240,000.
On Friday we have both CPI and Core CPI. The former is anticipated to rise from 0.0% to 0.2% and the latter from 0.1% to 0.2%.
COT data shows that large commercials slightly increased their net short position in the US$ Index from -2,800 to -3,773 last week. This remains close to a 52 week extreme so we remain BULLISH.
 
EURO:The EURO closed marginally higher against the USD last week.
Again there is no data for the EURO this week.
COT data for the Euro shows that large commercials very slightly decreased their net short position last week from -115,535 to -108,561. This remains close to a 52 week low so we remain VERY BEARISH.
 
GBP:The GBP fell sharply against the USD last week.
On Thursday we have manufacturing Production expected to be 0.0% from the previous -0.2%.
COT data shows that large commercials slightly increased their net long position from +21,158 to +23,107 last week. This continues to be close to a 52 week low so we remain BEARISH.
 
YEN:The YEN closed slightly higher against the USD last week.
There is no data for the YEN this week.
COT data shows that large commercials decreased their net long position from +138,464 to +124,932 last week. This continues to be close to a 52 week extreme. We therefore remain BULLISH.
 
AUD:The AUD fell meaningfully against the USD last week.
On Thursday the RBA Governor speaks.
COT data shows that large commercials increased their net short position from -71,209 to -79,588 last week. This is 52 week extreme so we remain VERY BEARISH.
 
CNY: Three items for the CNY this week.
On Monday we have the Trade balance number expected to be 292B from the previous 294B.
On Tuesday we have both CPI and PPI. The former is thought to remain unchanged at 1.5% and the latter is expected to rise to 5.6% from the previous 5.5%.
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 slightly last week. Large commercials decreased their net short position from -19,707 and are now net long +29,595. We therefore alter our view from SLIGHTLY BEARISH to NEUTRAL.
RUSSELL2000: The RUSSELL2000 closed meaningfully lower last week. Large commercials did not alter their net long position which remains at +8,535. We therefore remain NEUTRAL.
NASDAQ100:The NASDAQ100 closed slightly lower last week. Large commercials increased their net short position from -46,573 to -50,092 last week. We therefore remain SLIGHTLY BEARISH.
VIX: VIX closed slightly lower last week.
Large commercials slightly decreased their protection last week increasing their net long position from +134,498 to +155,490. This is now a 52 week extreme so remain BULLISH on risk protection and BEARISH on risk.
 
COMMODITIES:
GOLD: GOLD fell sharply last week. Large commercials increased their net short position from -103,343 to -143,385 last week. Now that large commercials hold a net short position which is lower than 200,000 but is no longer at a 52 week extreme so we remain SHORT TERM CAUTIOUS.
SILVER: SILVER fell sharply last week. Large commercials increased their net short position from -29,532 to -39,667 last week. We therefore remain SHORT TERM CAUTIOUS.
COPPER: COPPER rose marginally last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials increased their net short position from -23,341 to -32,561. Large commercials generally carry a net neutral position. This is no longer a neutral position. We therefore remain SLIGHTLY BEARISH.
CRUDE OIL: CRUDE rose slightly last week. Large commercials increased their net short position from -422,066 to -486,135 last week. We therefore remain SLIGHTLY BEARISH.
 
The gold:silver ratio increased from 75.95 to 77.54 indicating meaningful silver underperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose last week. Large commercials decreased their net short from -43,474 to -32,317 last week. We remain SLIGHTLY BEARISH.
 
OTHER FX:
CAN$: The CAN$ fell sharply against the USD last week. Large commercials increased their net short position from -41,516 to -61,484. This remains a 52 week extreme. We therefore remain VERY BEARISH.
NZD:The NZD fell sharply against the USD last week. Large commercials slightly increased their net short position from -37,180 to -37,567 last week. This is a 52 week extreme and we therefore remain VERY BEARISH.
AUD/YEN:The AUD closed lower in this pair. COT data for the AUD showed deterioration for the AUD and slight deterioration for the YEN last week. This bodes badly for risk in the short term.
 
THOUGHTS FOR NEXT WEEK
No major changes in COT this week.
The USD Index continues to fail to make new highs. This continues to bode well for precious metals in the long term.
However COT for both gold and silver continue to warrant short term caution.
Commodity backed currencies especially the AUD, CAN$ and NZD continue to be worrying.
 
Therefore our recommendations based on our COT readings for next week are as follows:
Short term traders should go short the precious metals whilst longer term traders should remain flat.
Continue selling the AUD, CAN$ and NZD into strength.
Stay away from risk.
Buy VIX on any dips below 10.

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