Fundamentals for the Week Ahead : 18 July 2014

Posted On 18 Jul 2015
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Greece is slowly but surely becoming less of a focus in traders minds. Back on everyone’s radar is $ strength, risk strength and commodity weakness.

the only question everyone seems to be asking is when will the $ as measured by the $ Index make and break new highs and therefore how much further will risk as measured by the S&P500 rally.

This week’s data is sparse to say the least. Couple that with thin markets due to the summer lull should result in the path of least resistance continuing. In other words more of the same.
USD: Only one key data point for the USD this week which is the usual Thursday Unemployment Claims number anticipated to show that 285,000 joined the ranks of claimants.
COT data shows that large commercials decreased their net short position in the US$ Index from 72,574 to 71.620. BEARISH.
EURO: Two items for the EURO both on Friday. French Manufacturing PMI is expected at 51.1 and German Manufacturing PMI at 52.1.
COT data for the Euro shows that large commercials slightly increased their net long position from 141,478 to 143,924. BULLISH.
GBP:  On Wednesday we have the MPC Official Bank Rate Votes expected at 0-0-9 meaning that no member voted for a hike or reduction in rates and that all 9 voted for maintaining rates.
On Thursday we have Retail sales expected to show a rise by 0.4%.
COT data for GDP shows that large commercials increased their net long position from 21,171 to 23,213. BULLISH.
YEN: On Wednesday we have the Trade balance number expected at -0.25T.
COT data shows that large commercials decreased their net long position from 100,465 to 83,497. We therefore change our stance from SLIGHTLY BULLISH TO NEUTRAL.
AUD: On Monday we have the Monetary Policy Meeting Minutes.
On Tuesday we have CPI expected at 0.8% and the RBA Governor Stevens speaks.
COT data shows that large commercials increased their net long position from 47,565 to 60,101 to  which is not insignificant but a long way away from their largest net long in March which stood at 107,717. SLIGHTLY BULLISH.
CNY: Only one item of importance for the CNY this week which is Manufacturing PMI on Thursday expected at 49.8 indicating contraction.
There is no COT data for the CNY.
OTHER COT DATA OF NOTE: Going forward we are adding COT data for products that stand out.
GOLD: Large commercials reduced their net short position from -52,589 to -48,469. This now stands at the lowest short position over the last 52 weeks and is therefore SIGNIFICANTLY BULLISH.
SILVER: Large commercials slightly increased their net short position from -14,319 to -15,589. Like gold this is very, very close to their lowest net short position over the last 52 weeks and therefore continues to be SIGNIFICANTLY BULLISH.
NZD: Very interesting. COT data shows that large commercials have been aggressively adding to their net long position which now stands at 23,537 net long. This is by far the highest long position they have held for more than 2 years and is therefore SIGNIFICANTLY BULLISH.

OUR VIEW: How long can the $ continue it’s rally dragging risk higher? No idea. What we do know however is that when it does break lower, the move will be sharp and vicious. This will ensure that the maximum number of traders are hurt the most.

In this way the market will reward the smallest minority at the expense of the vast majority.

Stay nimble. Good luck trading.


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