As the European sovereign debt drama continues to unfold, skittish currency exchange traded fund (ETF) investors have been dumping the euro and British pound and buying up the U.S. dollar. But the greenback is far from the only place you can go.
To find out all you need to know about the impact of the European debt crisis, just look at the performance of the U.S. dollar in the last three months:
You just can’t argue with the trend seen in the dollar’s performance. There’s a clear argument to make for its longevity, too: While government leaders are getting close to a rescue deal with Greece, even if one does happen, who’s going to make Greece accountable?
Furthermore, why try to predict any outcome? Just look at the dollar, which is solidly above its 200-day moving average. You’ve got to balance the fundamentals with the technicals, and right now, the ingredients are all there.
But the dollar isn’t your only option in these trying times for the euro. The CurrencyShares Euro Trust (NYSEArca: FXE) is down 5% for the year. [ETFs to Ride the Euro’s Changing Fortunes.]
Are you bullish or bearish on the euro’s prospects? One way to play your euro sentiment is by using leveraged and inverse ETFs. Speculation in currency trading is highly risky, especially when leverage is added into the mix. Before you jump in, be sure you know what you’re jumping into. Market Vectors Double Long Euro ETN (NYSEArca: URR) and Ultra Euro ProShares (NYSEArca: ULE).
Other currency opportunities can be found in areas well outside Europe. The Canadian dollar, Australian dollar, Mexican peso, Brazilian real and an ETF that holds a basket of currencies have been faring well in the last month:
- CurrencyShares Canadian Dollar Trust (NYSEArca: FXC), up 2.1% in the last month
- CurrencyShares Mexican Peso Trust (NYSEArca: FXM), up 0.7%
- WisdomTree Brazilian Real (NYSEArca: BZF), up 1.7%
- CurrencyShares Australian Dollar Trust (NYSEArca: FXA), up 1.2%
- PowerShares DB G10 Currency Harvest (NYSEArca: DBV), up 1.2%
For more information on world currencies, visit our currency category.
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Max Chen contributed to this article.
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.