Asia gained today and opened the fourth quarter on a high note, rallying a day after sharp losses. Banking shares led the way, but investors stayed cautious, reports Chris Oliver for MarketWatch. Markets in Australia and New Zealand were the strongest. Taiwan delivered modest gains, and Tokyo’s Nikkei 225 ended on a mostly high note. South Korea’s benchmark ended in negative territory.

  • iShares S&P Europe 350 Index (IEV), down 28.5% year-to-date
  • iShares MSCI EAFE Index (EFA), down 28.4% year-to-date

The euro is coming down off its high against the U.S. dollar and Japanese yen, after speculation on government banks intervening throughout Europe, causing exchange traded funds(ETFs) to move.

The euro traded at a near-two-week low against the dollar after France and Belgium were experiencing a state-backed rescue of Dexia SA. European Central Bank President Jean-Claude Trichet declared a pan-European solution to the financial crisis wasn’t likely, reports Stanley White and Daniel Kruger for Bloomberg.

Meanwhile, the U.S. dollar rallied from its biggest decline against the yen in one week after the speculation of the U.S. senate will salvage a $700 billion bank-bailout plan as early as today after the House rejected it on Sept. 29. The European Union will not propose a bail out plan because Europe is not a federation with a federal budget.

The U.S. dollar is in demand from the global U.S.-dollar based system. ETFs reflecting this shift:

  • PowerShares DB US Dollar Index Bullish (UUP), up 3.1% year-to-date
  • CurrencyShares Euro Trust (FXE), down 1.2% year-to-date

Currency Exchange Traded Funds (ETFs)