September 12, 2007 at 3:00 pm by Tom Lydon
If the Federal Reserve decides to cut rates Sept. 18, it will bode well for foreign currency exchange traded funds (ETFs), such as the CurrencyShares Euro Trust (FXE). The rate cuts benefit foreign currency ETFs because our currency loses ground to their currencies that are flat or rising, says Gary Gordon for ETF Expert.
In fact, the dollar fell to a record low against the euro as investors increased their projections that the Fed will cut its target interest rate, according to Bo Nielsen and Min Zeng for Bloomberg. This is the dollar’s sixth-day decline, which is its longest losing streak since April. The European Central Bank is holding its rates even, and it might raise them soon. Already FXE has provided solid income combined with relatively low volatility.
Read the disclosure, as Tom Lydon is a board member of Rydex Investments.
Tags: Currency ETFs, Europe, Federal Reserve
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