After the Federal Reserve announced the start of higher interest rates, the weaker euro currency, along with the improved outlook for European exporters, is supporting currency-hedged Europe exchange traded funds.
Euro-currency hedged ETFs, which diminish the negative effects of a stronger dollar or weaker euro currency, outpaced other Europe ETFs as the falling euro helped push the hedged version slightly ahead. On Thursday, the Deutsche X-trackers MSCI EMU Hedged Equity ETF (NYSEArca: DBEZ) was up 0.1%, iShares Currency Hedged MSCI EMU ETF (NYSEArca: HEZU) rose 0.4% and WisdomTree Europe Hedged Equity Fund (NYSEArca: HEDJ) gained 0.3%. [International ETFs to Diversify Ahead]
Meanwhile, the CurrencyShares Euro Currency Trust (NYSEArca: FXE) dipped 1.0% Thursday as the euro fell 0.9% to $1.0809.
In contrast, the non-hedged iShares MSCI EMU ETF (NYSEArca: EZU) was down 0.5% on Thursday while the SPDR EURO STOXX 50 (NYSEArca: FEZ) was 0.4% lower. The two non-hedged ETFs both focus on Eurozone countries.
Exporters and financial stocks led European markets after the Fed announced its first rate hike in almost a decade, Bloomberg reports.
The U.S. dollar was appreciating against a basket of currencies Thursday after the Fed announcement. The tighter monetary policy would diminish the supply of U.S. dollars floating around in the economy and help the greenback appreciate against foreign currencies. [Dollar ETFs Can Still Beat Euro Rivals]