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EUR/USD rebounds modestly to 1.0930, US Dollar holds to gains
EUR/USD dropped for the second consecutive day on Monday. The correction from 1.1070 found support above 1.0900. The US Dollar rose across the board as bets on Fed interest rate cuts later this year pared. Ahead of the Asian session, markets seem calm with the US Dollar holding firm to recent gains.
AUD/USD steady around 0.6200 ahead of RBA minutes
AUD/USD rebounded modestly during Monday’s American session to the 0.6700 area, avoiding a daily close below the 20-day Simple Moving Average. A stronger US Dollar keeps the risks tilted to the downside. The RBA will release the minutes of its latest meeting.
The United States total net TIC flows fell below forecasts in February of this year, coming in at $197.6 billion, or $28 billion lower than the anticipated $225.6 billion forecast.
The Treasury Department report released on Tuesday noted that TIC flows indicate global investor confidence in the U.S. economy, as they track the movement of foreign investments in U.S. assets. It is thought that foreign investors have become more cautious since February, indicating a potential dip in market confidence.
The net TIC flows, which are calculated from both long-term and short-term transactions, provide insight into foreign investors’ willingness to lend or invest in U.S. government issued securities including Treasuries, corporate bonds, and stocks.
The February data reflects a decline in both long-term and short-term transactions. Net long-term transactions dropped to $47.5 billion, a decline of $6.7 billion from the previous month. This can be primarily attributed to outflows of $38.7 billion in foreign investments in U.S. corporate bonds in February. Furthermore, net short-term transactions dropped to a negative $250.1 billion, falling $21.6 billion from the previous month.
The decline in foreign investments in the U.S. economy may indicate that there is a general lack of global confidence in the U.S. market. This could lead to further decline in investments, potentially impacting the stability of the U.S. economy. The potential implications of this data should not be underestimated, however, the domestic demand for U.S. assets currently remains strong, suggesting a possible recovery in the near future.