Rising Net Purchase Of U.S. Assets In March Reflects Risk Aversion

By Tzu-Wen Chen,

THETAKEAWAY: [U.S. Net Long-Term TIC flows rose more thanexpected in March] > [Increased demand in treasury bondsreflects risk aversion] > [AUDUSD mixed on Greek electionannouncement ]

The U.S. Department of the Treasury released a report today revealing that foreign demand for U.S. financial assets increased more than expected in March. According to the Treasury International Capital (TIC) statement, long-term net purchase of U.S. assets rose to $36.2 billion in March from $10.1 billion in February. The consensus forecast of four economists surveyed by Bloomberg News had called for net buying of $32.5 billion.

Net buying of treasury bonds and notes rose to $20.465 billion in March from $15.350 billion in February, reflecting the flow towards the safety of the U.S. bond market as euro sovereign debt woes and concerns of a softening Chinese economy weighed on market risk sentiment.

AUDUSD 1-minute Chart: May 15 , 2012

Chart createdusing Market Scope – Prepared byTzu-Wen Chen

The market reaction for the greenback was mixed, overshadowed by the announcement of a second Greek election immediately before the release of the TIC statement. The latest development in Greece carries implications of further instability in the euro zone, which sent investors back to the safety of the U.S. dollar. At the time of this report, the greenback was trading higher against the riskier Australian dollar at $0.9972.

--- Written by Tzu-Wen Chen, DailyFX Research
DailyFX is the forex news and research arm of FXCM, Inc (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.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/05/15/Rising_Net_Purchase_of_U.S._Assets_in_March_Reflects_Risk_Aversion_.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.

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