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The net amount of long-term financial investment flowing into U.S. equity, note, and bond markets, minus the amount of U.S. investment heading abroad dropped to $11.2b in April, compared to the rate of $55.4b reported in March. Overseas investors sold a net amount of $53.2b when short-term trades were accounted for, compared to the purchase of $25b the month before.
The effect of the ever-growing Trade and Current Account balances, that reveal the size of the U.S. Public debt, and Imports exceeding Exports, means the U.S. needs foreign investment to fund the shortfalls. This report reveals that in April that did not happen.
A miss on the TIC Data moves the Markets one way or the other because Institutions have to realign existing positions in response to the next Quarter and half Year targets, said TheLFB-Forex.com Trade Team Members. Money that flows into or out of US Markets will always impact the Usd, an increase in overseas investments can only be funded in dollars so a local currency is being sold, dollars are bought, and then transferred into Treasuries. In April that happened, but not to the degree expected, nor required to cover the shortfall.
By the time these numbers are released, (they run two months behind most reports), the process of swapping currencies has already happened and may not have an instant impact on the Usd. It does however give a good idea of the dollar sentiment going forward. The fact that the Federal Reserve have stepped in to buy a huge swath of newly printed Treasury notes may have helped stabilize the impact of this release; the market knows that the Fed is the back-stop, the Trade Tean added.
Going forward, the report may indicate the movement of investment funds from the U.S. and into the emrtging market countries. If so, we can expect another net reduction in money coming into the U.S. next month, remembering that by the time the release hits the currency impact has already been felt.