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What every FX trader needs to know about these record fund flows

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June 20, 2014 basic balance, bonds, currency, current accounts, dollar, ecb, euro, euro area, euro area economy, euro dollar, euro policy, eurozone, eurusd, fdi, fed, flows, fomc, foreign direct investment, foreign exchange, forex, forex dealers, forex deals, fund, fund flows, fx, fx strategy, fx traders, interest rates, investment, janet yellen, low dollar, macro, monetary policy, net flows, outflow of funds, owen thomas, owen thomas tv, record, saxo, saxo bank, saxo bank group, saxo private bank, saxo tv, stocks, teis knuthsen, traders, trading, tradingfloor.com, us, us dollar, us economy, us fed, usa, usd
400 billion euros, that's the biggest net flow of funds into the eurozone we've ever seen. At the same time, there's never been a larger net outflow of funds from the United States. Saxo Private Bank's Chief Investment Officer, Teis Knuthsen, says the development of these flows is a significant reason why the US dollar is failing to rally in the way many people would like. 
Teis is looking at the "basic balance", the sum of current accounts, foreign direct investments and portfolio flows. For the US, driven by a substantial current account deficit, we have a record  high deficit on the basic balance of USD 530 billion.He says things aren't likely to normalise until we see interest rate differentials widening and both the US Federal Reserve and the European Central Bank have signaled that's not going to happen any time soon.