ETFs: Caution Advised As All Currencies Jump (FXS, FXF, FXA, FXC, FXB, FXM, UDN, FXE, FXY, DBV, CYB, BZF)
MyplanIQ tracks currencies using the following currency ETFs (FXS), (FXF), (FXA), (FXC), (FXB), (FXM), (UDN), (FXE), (FXY), (DBV), (CYB), (BZF) to Monitor the trend for bellweather currencies.
In the light of continued and growing unrest in North Africa, we would have anticipated the continued flight to safe currencies and others would have been under downward pressure. We do not see that trend emerging.
All currencies, with the exception of Japan, are moving upward. It is true that the top three are also considered safe haven currencies but we would have expected to see the Swiss Franc have the biggest jump if it were a move to safety trend and we don’t see that.
This may signal that while there is an expectation that oil prices may rise and cause some short term turbulence, there is less concern that this will have any lasting impact on the economy.
|US Dollar Bearish||UDN||3.67%||3.34%||^|
|G10 Carry Trade||DBV||2.41%||1.76%||^|
The trend score is defined as the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).
The Krona continues to lead the table as the economy continues to deliver impressive results. There remains little concern about the currency appreciating and that hurting exports.
The Swiss central bank has issued comments that they will keep a firm grip on inflation and that interest rate rises will be used as they believe the low rates in other Eurozone nations are not sustainable.
The Aussie dollar also climbed sharply despite mixed news between rising commodity prices and less than expected building permits indicating softness in their construction industry.
The Real moved into positive territory as the central bank raised interest rates again. With already high interest rates, the government is trying to avoid overheating the economy even as their currency is making exports more expensive.
The Yuan is little changed as the country’s leaders gather for the National People’s Congress, which begins Saturday. There are signs that the government may be getting serious about allowing the currency to appreciate but that will have to wait until the session is over.
The G10 Carry Trade Currencies highlight the reduction in concern about the current strife in North Africa in the Middle East but there should be some concern that if this does spread, there may be greater impact on the world economy.
It’s hard to throw off the old expectations that currencies will be under pressure during times of world tension and while most of the currencies are moving up, there is reason to be cautious and see if there is a correction next week.
ETFs Mentioned: CurrencyShares Swedish Krona Trust (NYSE:FXS), CurrencyShares Swiss Franc Trust (NYSE:FXF), CurrencyShares Australian Dollar Trust (NYSE:FXA), CurrencyShares Canadian Dollar Trust (NYSE:FXC), CurrencyShares British Pound Sterling Tr (NYSE:FXB), CurrencyShares Mexican Peso Trust (NYSE:FXM), PowerShares DB US Dollar Index Bearish (NYSE:UDN), CurrencyShares Euro Trust (NYSE:FXE), CurrencyShares Japanese Yen Trust (NYSE:FXY), PowerShares DB G10 Currency Harvest (NYSE:DBV), WisdomTree Dreyfus Chinese Yuan (NYSE:CYB), WisdomTree Dreyfus Brazilian Real (BZF).
Disclosure:MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.
LTI Systems, Inc. is the operator of MyPlanIQ.comand ValidFi.com. The founders of LTI Systems have extensive technology and business background in computer and semiconductor industries. They have been using the strategies provided by MyPlanIQ for their own personal retirement and taxable investments. The mission of LTI Systems is to make wealth management investment strategies that are used to be only accessible to institutions and high net worth individuals available to private investors with a fraction of flat cost and ease of use. The founders of LTI Systems, investors themselves, take pride in creating such a system and service for investors by taking the perspective from the investor side. They are using the system and the strategies for their own investment and align their interests with their customers.
MyPlanIQ’s blogprovides periodical articles to discuss issues related to retirement plans (401(k), 403(b) and IRAs), deferred compensation plans (457), college savings plans (529), taxable brokerage investment accounts, variable annuities and universal life insurance plans. It also covers investment strategies, specifically strategic and tactical asset allocation and investment products such as ETFs and mutual funds. In addition, it syndicates daily articles that are related to retirement planning, personal finance, investment strategies, annuities, insurance, college savings and market/economic outlooks. It provides a comment and discussion community for readers.