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US investor diversification into foreign markets not so negative for USD - BTMU

FXStreet (Łódź) - Derek Halpenny, European Head of Currency Strategy at the Bank of Tokyo Mitsubishi UFJ comments on the US TIC Flows numbers for August, released on Thursday.

Key Quotes

"The TIC data from the US was released last night and revealed foreign investors bought USD 26.5bn worth of US securities in August. That was the largest since May but the 12-month sum total inflow is running at a little under USD 200bn, the same was twelve months ago."

"The surprise in the data came on the other side with US investors repatriating USD 25.5bn worth of foreign securities. US investor diversification into foreign markets was a clear negative for the dollar last year with outflows of USD 221bn but that negative is looking a much smaller influence this year with the US investor outflows abroad at USD 67bn as of August."

"Finally, on the flow side it is worth mentioning the decision of AbbVie to pull out of the Shire takeover due to the White House crackdown on tax inversion deals. The US over most of the last decade has been running notable FDI deficits in part due to a notable pick-up in FDI outflows from US entities investing abroad. US FDI abroad totalled USD 408.2bn in 2013 but in H1 2014 has totalled just USD 120.7bn – the White House crackdown may ultimately result in the US FDI deficit shrinking considerably and that is another USD flow positive development worth remembering."

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