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March 16, 2005
USD May Weaken Today, Wed., March 16, 2005, 7:00 AM
The 4Q04 U.S. Current Account Deficit will be reported at 8:30 AM, and the news should be negative if you are long USD. The prior deficit was reported at -$164.7 billion and this is expected to grow to -$183 billion.
The U.S. current account is the accounting of the dollar value of the total goods, services and interest payments that flow in or out of the U.S. on a quarter yearly basis.
The plain vanilla truth of it is that foreigners are not buying U.S. dollar-denominated securities as fast as they are selling goods to the U.S. and earning interest on their U.S. securities. This current account report will show more of the same, and that's a negative for the USD.
Yesterday there was actually a better than expected U.S. portfolio inflows number for January, which gave temporary support to the declining USD, but economists are now starting to doubt the strength of the next (February) net capital (portfolio) inflow number.
In summary, weaker dollar, stronger gold.
Same old, same old.
Have a good day.
Posted by Posted by Bill Cara on March 16, 2005 07:01:27 AM | Category: Forex