Net inflows of capital into US assets in May rose to $60 billion, more than the amount needed to cover the US monthly trade deficit in that month, a government report showed on Monday. Net inflows of capital climbed from April's revised $47.8 billion, the Treasury Department said in its monthly International Capital data. The US trade deficit was $55.3 billion in May.
Analysts had expected inflows of between $60 billion and $70 billion.
The euro rose to $1.2065 shortly after the data, while the dollar slipped to 112.05 yen as some traders took note of data showing foreigners had become net sellers of US equities.
But most analysts focused on strong inflows covering the trade deficit after two months of shortfalls.
"The fact that it exceeded the trade deficit in May is helpful from a sentiment perspective," said Robert Lynch, senior currency strategist at HSBC in New York.
Foreigners sold $72 million of US stocks May after buying $4.67 billion the previous month. It was the first time foreigners were net sellers of US equities since September 2004.
Financial markets watch the report as a measure of foreign investors' appetite for US assets. However, the Treasury Department says the report does not fully reflect whether the United States is funding its trade deficit because the data does not include direct investment or bank accounts.
Foreign buying of US Treasury securities rose to $27.58 billion, after buying $24.69 billion worth in April.
Holdings of US Treasury securities by Japan, China and the United Kingdom rose in May, and Norway's holdings jumped to $37.7 billion from $29.8 billion.
Holdings by Caribbean banking centers, seen as an indication of hedge fund activity, climbed to $125.9 billion from $124.6 billion.
Official buying of Treasuries eased to $6.8 billion from $13.9 billion, but private buying of government debt securities rose to $20.8 billion from $10.8 billion.
Foreign buying of agency bonds more than tripled to $22.69 billion from $6.67 billion, the highest level since January. Foreign net purchases of corporate bonds rose to $20.42 billion from $18.02 billion.