Earlier this week, we talked about how if the markets continued in their current trend, it could lead to the unraveling of the yen carry trade exchange traded fund (ETF) investment strategy. Bryan Moore of The Financial Whiz argues the carry trade isn’t going anywhere just yet. Although the Japanese yen has been rising relative to the dollar, it’s unlikely the Japanese central bank will raise interest rates enough to have any effect on the carry trade. Moore sees all of the latest news as an instigator for panic selling.
Speaking of the yen’s appreciation, CurrencyShares Japanese Yen Trust (FXY) reached a new high yesterday. It is up 7% for the month and is 5.4% above its trend line. When the Federal Reserve announced its discount rate cut earlier today, the yen temporarily dropped, theoretically luring investors back, according to Min Zeng for Bloomberg.
As with any investment decision, know what is behind the ETF and what could affect its performance.
Read the disclosure, as Tom Lydon is a board member of Rydex Investments.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.