1. US Net Foreign Securities Purchases

US TIC - Net Foreign Security Purchases (MAR) (13:00 GMT; 09:00 EST)
Consensus: $79.9B
Previous:  $86.9B

Outlook:  Given the exaggerated market reaction garnered in the currency market from the most recent goods trade data, and subsequent lack of response to an interest rate hike and Treasury Report, Monday's expected drop in foreign investment in US assets could throw dollar-backed pairs for a loop once again.  Expected to have dropped to a net $80 billion surplus, capital flows would help put some distance between the slimmed down deficit in goods trade but could also indicate some hesitation on foreign investors' parts in investing in the world's largest economy.  In March, the Federal Reserve held to its policy of hawkish lending rate changes while equities approached recent historical highs.  On March 28th, in line with nearly unanimous expectations, the central bank raised the Fed Fund's rate 25-basis points to 4.75%.  The additional yield on debt instruments provided by the boost should have attracted more foreign dollars to take advantage of the high return vehicles.   Similarly, US stocks continued to march higher with the Dow index approaching a five-year high as business valuations continue to benefit from business investment that is aimed at fending off capacity constraints.  Going forward however, American assets could loose their appeal on the global market, not in nominal terms, but rather in relative terms.  While US assets are on the move higher, a growing portion of global assets is making its way into other industrialized economies whose growth is accelerating while that of the US is beginning to cool.

Previous:  Net investment in US assets rebounded heartily in February to $86.9 billion, the most in three months, as higher interest rates and faster economic growth drew capital through electronic boarders. Overnight lending rates in the US for the month of February were 4.5%, matching that of the UK and making it amongst the highest of fully industrialized nations.  In turn, this led to 10-year Treasury yields to average 4.56% for the month - a generous return for an asset that most consider risk free.  The benefit to government paper investment was sizable with a net $21.9 billion bought from outside sources.  Amongst that figure, OPEC countries, Japan and China were the largest contributors.  The Organization of Petroleum Exporting Countries increased their holdings of Treasuries by $5 billion, making the largest contribution.  US stocks also seemed to be a good investment for foreign funds.  Foreigners increased holdings a net $16.5 billion spurred on by the S&P 500, which was up nearly 3.5% for the year by the end of
February.

Richard Lee is a Currency Strategist at FXCM.