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Negative TIC Data Spur Dollar Sale

July 16, 2009 by

EUR/USD rose for a second day today as the long-term U.S. securities transaction balance appeared to be negative in May. Euro rose against the dollar not as fast as yesterday but it still continued to dominate on Forex over the less interest-rich currencies. EUR/USD is now trading near 1.4124.

Initial jobless claims in U.S. were reported at 522k for the last week; that’s 47k below the previous value of 569k. A decline to 553k was expected.

Net purchases of the long-term U.S. securities were reported at -$19.8 billion dollars in May. Negative flow of money is a bad signal for the dollar, which may start loosing its position as a global reserve currency. Another problem caused by the lack of interest in the U.S. long-term securities is that the budget deficit won’t be sustainable if not enough treasuries will be sold. A positive $16.5 billion value was expected from this report after $11.5 billion reported for April.

Philadelphia Fed index decreased from -2.2 to -7.5 in July. It was expected to go down only to -5.

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