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Capital Flows/Deficit.
With Capital Flows coming in at $63.4Billion...and an upward revised for August at $59.9Billion...the Deficit woes for USD weakness have begun to shift the pendulum from structural deficiencies to GDP/NFP/FED Data.
With Oil off its inflationary Highs signaling a Euro negative...and with Capital Flows outpacing the Deficit the US Dollar will have a reprieve...with this upcoming weekends meeting of the Group of 20...the Communique' at the conclusion on Exchange Rates will set the tone to finish 2004 and prepare for 2005.
With the Euro appreciation to 1.30 based on Oil...to an Oil Reversal South to $46bbl...the Trade Deficit was the next and only cause for a Eur/Usd appreciation beyond 1.30+...now with Capital Flows outpacing the US Account Deficit...Eur/Usd has a double negative for a sustained Rally above 1.30 basis.
The Euro Longs have much to ponder...a downturn in Open Interest for the Euro Single Currency will Signal that the Longs are heading for the Exits...and Todays US Capital Flows may be the impetus for the Long Euro Cover.
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