Weekly Fundamentals - 03 September 2017

 
THE WEEK AHEAD FUNDAMENTALLY - KEY DATA TO WATCH OUT FOR
 
In conclusion to our report last week we wrote:
“No meaningful changes in COT readings this week.
We therefore continue to anticipate meaningful corrections in the precious metal sector especially as large commercials are now net short in excess of 200,000 contracts in gold.
The currencies remain virtually unchanged and we therefore continue to anticipate a USD bounce.
The EURO and the YEN should bear the brunt of this.
 
Therefore our recommendations based on our COT readings for next week are as follows:
Go short the precious metals.
Sell all currencies against the USD concentrating on the EURO and the YEN.
Stay away from risk but be prepared to cover shorts into any meaningful weakness
Watch the 30 YEAR BOND closely.”
 
Now let's see how we fared on our recommendations:
Going short the precious metals was wrong in a big way.
Selling the currencies against the USD especially the EURO and the YEN was spot on.
Covering shorts in risk was good.
 
Another indifferent to poor week.
 
A reasonably busy week in terms of data.
 
USD:The US$ Index closed up reasonably last week.
On Wednesday we have Non-Manufacturing PMI expected to rise from 53.9 to 55.5.
On Thursday we have the usual Unemployment Claims figure estimated to be 245,000 from the previous 236,000 and Crude Oil Inventories.
COT data shows that large commercials decreased their net short position in the US$ Index from -4,670 to -2,794 last week. This is a 52 week extreme so we alter our view from BULLISH to VERY BULLISH.
 
EURO:The EURO closed down sharply against the USD last week.
Two items both on Thursday.
We start with the Minimum Bid rate which is the rate on the main refinancing operations that provide the bulk of liquidity to the banking system.
This is followed by the ECB Press Conference.
COT data for the Euro shows that large commercials very slightly decreased their net short position last week from -114,526 to -113,760. This remains close to a 52 week low so we remain VERY BEARISH.
 
GBP:The GBP rose reasonably against the USD last week.
On Monday we have Construction PMI thought to rise from 51.9 to 52.1.
Tuesday sees the release of Services PMI expected to fall slightly from 53.8 to 53.6.
Finally on Friday we have manufacturing Production expected to rise from 0.0% to 0.3%.
COT data shows that large commercials increased their net long position from +44,993 to +54,141 last week. We therefore alter our view SLIGHTLY BEARISH t oNEUTRAL.
 
YEN:The YEN fell strongly against the USD last week.
One item for the YEN this week.
On Thursday we have the GDP number anticipated to fall from 1.0% to 0.7%.
COT data shows that large commercials decreased their net long position from +82,791 to +75,204 last week. We therefore remain SLIGHTLY BULLISH.
 
AUD:The AUD rose reasonably against the USD last week.
On Tuesday we have the Cash Rate which is the interest rate charged on overnight loans between financial intermediaries. This is followed by the RBA Rate Statement.
Also on Tuesday the GDP number is expected to show a strong rise from 0.3% to 0.8% and the RBA Governor speaks.
On Wednesday we have Retail Sales expected to come in at 0.2% from the previous 0.3% and the Trade Balance number estimated to rise from 0.86B to 0.95B.
Finally on Friday the RBA Governor speaks again.
COT data shows that large commercials slightly decreased their net short position from -75,872 to -81,414 last week. This remains close to a 52 week extreme so we remain VERY BEARISH.
 
CNY: Three items for the CNY this week.
On Thursday we should have the Trade balance number.
Friday sees the release of both the CPI and PPI figures. The former is anticipated to have risen from 1.4% to 1.6% and the latter to have fallen from 5.5% to 5.4%.
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 strongly last week. Large commercials increased their net short position from -45,509 to -76,305 last week. We therefore remain BEARISH.
NASDAQ100:The NASDAQ100 rose very strongly last week. Large commercials slightly increased their net short position from -33,014 to -34,130 last week. We therefore remain NEUTRAL.
VIX: VIX closed very sharply lower last week.
Large commercials increased their protection last week increasing their net long position from +112,271 to +120,764. This remains close to a 52 week extreme so remain BULLISH on risk protection and BEARISH on risk.
 
COMMODITIES:
GOLD: GOLD rose very strongly last week. Large commercials increased their net short position from -219,918 to -248,029 last week. As this is now greater than the -200,000 we remain BEARISH.
SILVER: SILVER rose very strongly last week. Large commercials increased their net short position from -55,049 to -65,588 last week. We therefore remain BEARISH.
COPPER: COPPER rose strongly last week. Copper is an important metal as it is a leading indicator for many commodities. Large commercials increased their net short position -41,062 to -44,826 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 slightly last week. Large commercials decreased their net short position from -455,866 to -381,120 last week. We therefore remain SLIGHTLY BEARISH.
 
The gold:silver ratio decreased from 75.71 to 74.82 indicating strong silver outperformance last week.

DEBT:
US 30 YEAR BOND: The BOND rose marginally last week. Large commercials decreased their net short from -80,140 to -58,301 last week. We therefore remain BEARISH.
 
OTHER FX:
CAN$: The CAN$ rose strongly against the USD last week. Large commercials slightly increased their net short position from -66,306 to -68,676. This remains close to a 52 week extreme. We therefore remain VERY BEARISH.
NZD:The NZD fell strongly against the USD last week. Large commercials decreased their net short position from -24,620 to -21,304 last week. We therefore remain VERY BEARISH.
AUD/YEN:The AUD rose strongly in this pair. COT data for the AUD deteriorated for the AUD and improved for the YEN last week. This means that the view towards risk should continue to become less benign over the coming weeks.
 
THOUGHTS FOR NEXT WEEK
No meaningful changes in COT readings this week.
We therefore continue to anticipate meaningful corrections in the precious metal sector especially as large commercials are now net short in excess of 200,000 contracts in gold.
The currencies remain virtually unchanged and we therefore continue to anticipate a USD bounce.
 
Therefore our recommendations based on our COT readings for next week are as follows:
Go short the precious metals.
Sell all currencies against the USD concentrating on the AUD and CAN$.
Stay flat risk.
Watch the 30 YEAR BOND closely. It is potentially entering a buy zone.

For timely, accurate trade signals follow our STTS service.

For those who want to join the lucky ones receiving real time, accurate and 100% honest and transparent trade signals visit and subscribe here.

Stay nimble. Good luck trading.
 

CHECK OUR INTERACTIVE ECONOMIC CALENDAR FOR FULL LIST OF UPCOMING DATA RELEASES

DISCLAIMER
The information contained in this publication is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Users acknowledge and agree to the fact that, by its very nature, any investment in CFDs and similar and assimilated products is characterised by a certain degree of uncertainty and that, consequently, any investment of this nature involves risks for which the user is solely responsible and liable.
Any recommendation, opinion or advice contained in such material reflects the views of TFF, and TFF expressly disclaims any responsibility for any decisions or for the suitability of any security or transaction based on it. Specifically, any decisions you may make to buy, sell or hold a security based on such research will be entirely your own and not in any way deemed to be endorsed or influenced by or attributed to TFF.
Past performance should not be seen as an indication of future performance. Market and exchange rate movements may cause the value of your investment to rise or fall and an investor may not get back the amount invested.
Investors considering opening a self-trading account should limit their exposure to maximum 10% of their investment capital.
Investments are not obligations of, deposits in, insured or guaranteed by TFF.