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Release Explanation: The Treasury Investment Capital (TIC) report is a measure of foreign investment flowing into the US Equity, Treasury, and Bond Markets, minus the amount of US investment heading abroad. It is important since a certain amount of foreign investment is currently needed in the US to fund our “twin deficits” the Trade and Current Account Balances. Trade and Current Account Balances: the size of the US Public debt and Imports exceeding Exports means the US needs foreign investment to fund the shortfalls. 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.
”Money that flows into or out of US Markets will always impact the US Dollar, an increase in overseas investments can only be funded in US Dollars so a local Currency is being sold, US Dollars are bought, and then those US Dollars are transferred into Treasuries. By the time this report is released, this process of swapping Currencies has already happened and may not have an instant impact on the US Dollar. It does however give a good idea of the US Dollar sentiment.” TheLFB-Forex.com Trade Team members said.
TheLFB-Forex.com Trade Desk Thoughts: Demand for U.S. financial assets rose again in March from the previous month. Net foreign purchases of long-term U.S. securities were $56.4 billion. Of this, net purchases by private foreign investors were $30.0 billion, and net purchases by foreign official institutions were $26.4 billion.
Net foreign acquisition of long-term securities, taking into account adjustments, is estimated to have been $36.9 billion. Foreign holdings of dollar-denominated short-term U.S. securities, including Treasury bills, and other custody liabilities increased $26.7 billion. Foreign holdings of Treasury bills increased $47.9 billion.
“Foreign acquisition of U.S. long-term securities picked up in March, even though it lacked any solid improvements in the previous two months. At the same time, the number of foreign securities purchased by U.S. residents remained at low levels, something that may have provided some support for the dollar” TheLFB-Forex.com Trade Team noted.
Forex Technical Reaction: The release passed unnoticed in both the currency and in the equity markets. Since the day started, the dollar strengthened against the euro and the yen, but traded virtually flat against the pound.
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