Dollar flows underwhelming

If you vote with your feet, the financial flows from the Treasury TIC report last Friday shows that global investors do not want to hold dollar assets. While the net long-term inflows were positive, the size was less than expected from survey data prior to the announcement.

http://www.treasury.gov/press/releases/hp685.htm

It is hard to use this flow data to forecast the direction of the dollar but it does provide strong confirming evidence on the dollar decline. Without new purchases by foreign investors there will be a dollar price decline. The trends are not very positive. Even with a rebound in many financial markets, foreign buyers stayed away from the US. Of course, there has been continued uncertainty over the credit markets, but this data shows that investors have become more risk averse over the prospects for US financial markets. Official net buying of Treasuries was the only bright spot. It rebounded after two negative months, but this change is a long way from saying central banks want to hold dollars.