THE TAKEAWAY: [U.S. Net long-term TIC increased more than forecast in December] > [Demands on American assets are increasing due to global slowdown] > [USD/JPY Mixed]
The U.S. net long-term International Capital (TIC) rose nearly twice the forecast amount in December, suggesting that international investors have increased their demand for U.S. financial assets amid concern of a global slowdown. The Treasury Department reported today that taking into account transactions in both foreign and U.S. securities, the net long-term TIC flows totaled $64.2 billion in December following an upwardly revised gain of $52.4 billion from $52.3 billion initially reported in the previous month. The consensus forecast of economists in a survey polled by Bloomberg News called for an increase of $35.0 billion. Also, the total net TIC flows fell to $25.2 billion in December following a reading of $27.8 billion in November.
The report released today indicates that global investors still consider U.S. as a safe haven even with the fiscal issues. Purchases of U.S. assets especially the U.S. Treasuries are increasing amid concerns of the slowdown in Europe and threaten of global currency war. In addtion, Market expects that U.S. politicians will come up with a long-term plan to solve its fiscal budget limitation.
USDJPY 1-minute Chart: February 15, 2013
Chart created using Market Scope – Prepared by Renee Mu
Following the data release, the markets saw a mixed reaction for the greenback against its Japanesepeer. At the time of this report was written, the USD/JPY was trading at 93.33 yen.
--- Written by Renee Mu DailyFX Research