Accelerating global money flows towards the US will underpin a resurgent dollar and look boost US assets in months to come, according to data compiled by CrossBorder Capital, as investors seek refuge from global political instability and look for strong liquidity conditions.
The US component of the Global Liquidity Index™ (GLI™) – which tracks global money flows – showed a reading of 72.8 in July compared with 66.4 a month earlier, highest reading this year. A reading above 50 denotes expansion, a reading below 50 a contraction.
US central bank and private sector liquidity increased and financial conditions improved, creating the conditions for a rebound in capital flows in the months to come, said Michael Howell, managing director of CrossBorder Capital, which compiles the index.
“The US lost a lot of foreign money in the first six months of the year but that money is now starting to flow back,” Howell said. “Capital inflows have already begun to pull the dollar up and we expect to see further flows out of sterling and the euro towards the US.”
Click here to download the July report.
