Forex News Blog
Back to The Headlines
Wednesday September 17, 2008 - 15:32:50 GMT
Share This Story
Larry Greenberg - currencythoughts.com
How The U.S. Current Account Deficit Was Funded in the Second Quarter
The dollar was under sustained selling pressure during the first quarter, and it showed in the balance of payments data. Likewise, the dollarâ€™s increasingly improved tone after the rescue of Bear Stearns in mid-March was mirrored in the greatly improved quality of net capital inflows in 2Q08. The current account deficit itself has not changed dramatically, equaling 5.1% of GDP in 2Q after 5.0% of GDP in 1Q, 4.8% of GDP in 4Q07, 5.0% of GDP in 3Q07 and 5.3% of GDP in full-2007. The table below compares funding of the U.S. current account shortfall last quarter (top row) to the four prior quarters. Amounts are expressed in billions of U.S. dollars. The tableâ€™s second and third rows aggregate official and private capital, where the latter includes any statistical discrepancy. In a healthy currency situation, one likes to see long-term private capital flows, that is net direct investment plus net securities transactions or portfolio investment, comprise a significant portion of total private capital inflows. These high-quality private inflows are shown in the fourth row. In the first quarter of 2008, direct and portfolio investment produced an outflow of nearly $1 billion, and official capital funded 100.5% of the current account imbalance. In 2Q08, by contrast, official capital offset 55.6% of the $183.1 billion current account deficit, which was close to the 53.2% share in full-2007. The fifth and final row shows the period average trade-weighted dollar against a selected group of major currencies that fluctuate against the U.S. dollar. These balance of payments data were released earlier today by the Commerce Department, while the dollar index is on the Fedâ€™s web site.
|Dir & Port
The table below breaks down the direct investment flows into their component parts, U.S. direct investment abroad, foreign direct investment in the United States, U.S. net purchases of foreign bonds, U.S. net buying of foreign stocks, and foreign net buying respectively of U.S. Treasuries, corporate bonds, agency bonds, and equities. Amounts are again expressed in billions of dollars. The right-most column indicates the change in the flow between the first and second quarters, expressing such with a positive sign if the change involves an increased inflow or reduced outflow and a negative sign in instances involving a smaller inflow or larger outflow. Although three of the eight components have a negative sign, these high-quality capital flows taken in aggregate improved by over $80 billion. For comparative purposes, the quarterly average inflow generated by direct investment and portfolio investment during 2007 was $86.6 billion.
|U.S. DI Abroad
|Fgn DI in U.S.
|U.S. + Fgn Bonds
|U.S. + Fgn Stks
|Fgn + Treasuries
|Fgn + U.S. Corporates
|Fgn + U.S. Agencies
|Fgn + U.S. Equities
One sees from this additional dissection of the balance of payments that the greatest source of the rise in net long-term U.S. capital inflows last quarter was caused by a swing from $10.7 billion of net foreign sales of U.S. corporate bonds in 1Q08 to net purchases of $50.5 billion of them in the second quarter. Direct investment account for the bulk of the rest of the improvement. Finally, increasing net sales of U.S. agency bonds by foreigners presaged the mounting troubles of the two GSEâ€™s that resulted in the Treasuryâ€™s seizure of both Fannie Mae and Freddie Mac earlier this month.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."
Elevate Your Trading With The Amazing Trader!
The Amazing Trader includes:
Upgrade Your Trading experience. Try the Amazing Trader
- Actionable trading levels delivered to YOUR charts in real-time.
- Live trading strategy sessions.
- Market Updates with Trading Tools.
Trading Ideas for 19 February 2018
Upgrade Your Trading. Try The Amazing Trader
GVI Trading. Potential Price Risk Scale
Mon 19 Feb 2018
AA: Major, A: High, B: Medium
00:00 CN, US- Holiday
Tue 20 Feb 2018
00:00 CN- Holiday
A 10:00 US- ZEW Survey
Wed 21 Feb 2018
00:00 CN- Holiday
A All Day flash PMIs
A 15:00 US- Existing Homes Sales
A 15:30 US- EIA Crude
AA 19:00 US- Fed Meeting Minutes
Thu 22 Feb 2018
A 09:00 DE- IFO Survey
A 09:30 GB- GDP
AA 13:30 CA- Retail Sales
A 13:30 US- Weekly Jobless
Fri 23 Feb 2018
A 10:00 EZ- Final HICP
AA 13:30 CA- CPI
John M. Bland, MBA
co-founding Partner, Global-View.com
Start trading with forex broker Markets Cube
Max McKegg's Daily Forex Trading Forecasts
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
Request a TRIAL of Max's Forex Service.