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TIC Improves, Empire Hits Record Low

Last updated 2/17/2009 9:13 AM ET (GMT -5) 0 Comments - Add your comment

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Kathy Lien

Director of Currency Research, GFT

In the month of December, the US dollar strengthened dramatically against all of the major currencies. Today's Treasury International Capital flow report for the same period indicates that part of the dollar's rise was due to foreign purchases of dollar denominated assets.  Net long term Treasury International Capital (TIC) flows rose $34.8B in Dec, while total net TIC flows increased $74B.  Despite China's own problems and the deteriorating balance sheet in the US, the Asian giant continues to fund the US deficit.  China holds the purse strings which is part of the reason why the G7 offered a more conciliatory tone at this weekend's meeting.

Empire State Manufacturing Survey Hits Record Low

Manufacturing activity in the NY region hit a record low in the month of February suggesting similar weakness for activity in the Philadelphia region later this week.  The details of the Empire State manufacturing report was mixed with 5 out of the 9 components improving.  Prices received, new orders, number of employees and average workweek deteriorated but prices paid, shipments, delivery time, inventories and unfilled orders contracted at a slower pace this month.  There is no question that the US manufacturing sector is suffering from the global slowdown and for the time being, there is no relief in sight.

Unfortunately the prospect of President Obama signing the Economic Stimulus Bill today may not help restore risk appetite.  Automakers GM and Chrysler are also expected to present their restructuring plans to request for additional funding.  Their problems could come back to the forefront, adding fear that the global economy is still a long way from recovery.

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About The Author

Kathy Lien began her FX trading career 10 years ago at J.P. Morgan Chase. After graduating New York University’s Leonard Stern School of Business at the age of 18, Kathy joined the bank's interbank FX trading desk and eventually moved to the cross markets proprietary trading desk. In the interbank market, her ability to create solid fundamental and technical analysis from the myriad of information on the market helped her trade forex spot and options. Her experience eventually led her to be chief strategist at Daily FX where she worked until she joined GFT in 2008.

With her knowledge of forex, as well as her experience trading other products, such as interest rate derivates, bonds, equities, and futures, Lien has built a reputation as an international currency analyst. She is frequently quoted on CNBC, Bloomberg, Fox Business and Reuters. Lien has also written for publications like Active Trader, Futures, and SFO magazine. She is the author of the newly updated Day Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, and the co-author of Millionaire Traders: How Everyday People Are Beating Wall Street at Its Own Game with Boris Schlossberg.

To buy Kathy’s newly updated Day Trading and Swing Trading the Currency Market: Technical and Fundamental Strategies to Profit from Market Moves, click here.