The safety trade was in full force Monday, including currency exchange traded funds as investors favored ETFs pegged to the Swiss franc and Japanese yen after Standard & Poor’s cut its triple-A credit rating on the U.S. by one notch.
CurrencyShares Swiss Franc Trust (NYSEArca: FXF) rose 1.4% in afternoon trading to yet another record high, while CurrencyShares Japanese Yen (NYSEArca: FXY) added about 1%.
Yet the PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) rose fractionally thanks in part to weakness in the euro. CurrencyShares Euro Trust (NYSEArca: FXE), declined 0.5%.
The Swiss franc ETF has been rallying despite the Swiss National Bank recently cutting interest rates and threatening to intervene in currency markets. The currency is seen as a safe haven in times of financial distress. [Swiss Franc ETF Barrels Higher Despite Rate Cut]
Currency ETFs have seen trading volume ramp higher over the past week, especially the Swiss franc fund and CurrencyShares Australian Dollar Trust (NYSE: FXA), which has dropped sharply along with commodity prices.
“The daily headlines are very currency-fueled these days, and the volatilities in related ETFs are unprecedented,” said Paul Weisbruch, head of ETF/options sales and trading at Street One Financial.
CurrencyShares Swiss Franc Trust
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.