Net Long-term TIC Falls To $10.1B In February; USD Pares Gain

By Trang Nguyen,

THE TAKEAWAY: U.S Net Long-term TIC Flows were $10.1 in February > International Demand for U.S. Financial Assets Slowed > USD Pares Gain

The U.S. Net Long-term International Capital (TIC) Flows unexpectedly decelerated in February, suggesting that international investors have curbed their demand for U.S. financial assets on optimistic signs in Eurozone.

Taking into account transactions in both foreign and U.S. securities, the net long-term TIC flows registered a rise of $10.1 billion in February compared to a upwardly revised gain of $102.4 billion in the previous month. Meanwhile, economists anticipated the reading of $42.5 billion. Inflows of long-term fund toward U.S. assets in the month was not to the same magnitude seen in January as the European debt crisis showed signs of easing that reduce U.S. assets’ attractions to foreign investors.

In sum, the net foreign acquisition of long-term securities, change in foreign holdings of short-term U.S. Treasuries and banking flows totaled $107.7 billion in February, U.S. Department of Treasury reported today. Of this, net foreign private inflows were $86.9 billion and net foreign official flows were $20.8 billion. The print was more than triple consensus forecast of $107.7 billion from the Bloomberg News survey. January net purchases were downwardly revised to $3.1 billion from $18.8 billion initially reported.

EURUSD 1-minute Chart: April 16 , 2012

Chart created using Strategy Trader – Prepared by Trang Nguyen

U.S. dollar gains ground versus most of its major peer except its Japanese trading partner in early North American trading session today. However, the greenback trims gain following the U.S. net TIC Flows report. The TIC flows are seen by most participants as the Government resource for offsetting the current trade deficit. The lower-than-expected net long-term TIC figures today shortly sent the reserve currency lower than major currencies. As seen from the 1-minute chart EURUSD chart above, the single currency climbed approximately 20 pips from 1.0340 to 1.0360 after the report.

--- Written by Trang Nguyen, DailyFX Research Team for DailyFX.com

To contact Trang, email tnguyen@dailyfx.com
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Original Article: http://www.dailyfx.com/forex/market_alert/2012/04/16/041612_US_Net_Long-term_TIC_Flows_February_.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.