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Weekly Fundamentals – 23 August 2015
THE WEEK AHEAD FUNDAMENTALLY – KEY DATA TO WATCH OUT FOR
In last week’s summation we wrote that whilst data was light volatility would be high with attention on the USD Index and commodities.
We were 100% correct.
The USD Index notably corrected, risk fell and precious metals rallied. This week data is even lighter. Perhaps more of the same? Perhaps not however.
USD: On Tuesday we have Consumer Confidence expected at 92.8.
Wednesday sees the release of Core Durable Goods which excludes transportation items and is expected to show a rise of 0.3%.
On Thursday we have GDP anticipated at 3.2% and the customary Unemployment Claims number estimated at 275,000..
On Friday we have the Goods Trade Balance number. This measures the difference in value between imported and exported goods during the reported month.
COT data shows that large commercials slightly reduced their net short position in the US$ Index from 79,099 to 75,177. We therefore remain BEARISH.
EURO: Only one figure this week which is the German Business Climate number expected at 107.6 which is a slight reduction from last month’s 108.0.
COT data for the Euro shows that large commercials decreased their net long position from 152,323 to 122,326. We remain BULLISH.
GBP: On Friday we have the GDP number expected at 0.7% which is unchanged and more importantly the BOE governor speaks. All attention will be on what he says about interest rate rises and how he says it.
COT data for GDP shows that large commercials moved from a net long position of 8,068 to a net short position of 2,449. We therefore maintain our NEUTRAL stance.
YEN: All data takes place on Thursday when we have Household Spending expected to show an increase of 0.9% from a previous drop of 2.0%; Tokyo Core CPI unchanged at -0.1% and Retail sales expected to come in at 1.1% which is a slight increase from the previous period’s 1.0%.
COT data shows that large commercials reduced their net long position from 148,025 to 125,219. We are only very slightly less BULLISH than last week.
AUD: Only one item of note for the AUD on Monday which is the important Monetary Policy Meeting Minutes.
On Wednesday RBA Governor speaks.
We also have Private Capital Expenditure this day expected to show a decline of 2.5% which is less than the 4.4% decline in the previous period.
COT data shows that large commercials very slightly decreased their net long position from 78,735 to 76,778. We therefore remain BULLISH.
CNY: There is no economic data for the CNY this week but market participants will be eagerly watching to see how the Chinese stock markets perform.
There is no COT data for the CNY.
OTHER COT DATA OF NOTE:
GOLD: Large commercials increased their net short position slightly from 24,458 to 29,948. We are now slightly BEARISH in the very short term.
SILVER: Large commercials slightly increased their net short position from 22,227 to 23,393. Like gold we are now slightly BEARISH in the very short term.
THOUGHTS FOR NEXT WEEK
We have been right about the US$ as measured by the USD Index. We have been right about precious metals. We have been right about the Yen. However caution must now prevail a little and only for the short term. The fall in the SP500 from 2097 at the beginning of the week to 1973 by the end is a huge 124 points or 6%. A short term relief bounce is warranted.
In this way the market will ensure that those late arriving shorts will be stopped out and yet again ensure that the markets benefit the small minority at the expense of the vast majority.
Precious metals will continue their rise after a short term fall and the USD Index will do exactly the opposite.
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Stay nimble. Good luck trading.
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