TIC Data Shows Demand for US Stocks and USD | Forex Fundamental Analysis

Follow us:

Twitter

RSS

Facebook

TIC Data Shows Demand for US Stocks and USD

US TIC data was released today with a big surprise to the upside. Net long term purchases were over $66 billion in September and even equities saw $11 billion in net purchases. That was despite the fact that the market crisis began to heat up in the last couple weeks of September. The news exceeded most analysts expectations, which is not unusual, and it reflects the international demand for the USD that forex traders have been acting on.

TIC data is released by the US Treasury once per month. The data covers the month previous to the month before the release. That means the data lags by about 6 weeks. This lag is offset somewhat by the usefulness of the data. TIC data is a direct measure of one of the few factors that directly impacts exchange rates. In today's video I will cover the other two factors and explain why they are important.

The release measures net purchases of US assets (debt, treasuries, bonds, stocks, etc) by international investors. In this way it is a reflection of international demand for USD denominated assets. The higher the number is the more demand there is for the USD, which is needed to purchase the assets.

TIC data is a key fundamental indicator for forex traders. Click here if you need more help understanding fundmental analysis in the forex.

The release confirmed the existing trend and hints at a possibility of a brighter future for stocks. If international buyers continue to acquire US stocks in October, I will be much more bullish. If TIC data had shown a net outflow or a reduced flow of investment into the US, I would have expected a disruption to the trend on the USD. That would also have been bad for US bond and stock prices.

From that perspective the report today shows us that risk on the USD is biased to the downside. This way we know what direction we are looking for trades as entry opportunities appear. Click here to discuss this report in the forex forums.