Euro ETFs have given up their high spot after hitting an 11-week high against the U.S. dollar on bad news regarding consumer sentiment. Now that all indications are that consumer spending will stay depressed, investors are pouring back into safe haven exchange traded funds (ETFs) instead.
Higher-yielding currencies, such as the euro, are taking a backseat now after data fed worries that a weak U.S. labor market is restraining consumer spending. Much of the recovery’s strength hinges on these numbers. Bradley Davis for The Wall Street Journal reports that in early afternoon trading in New York, the euro was at $1.2994 from $1.2994 late Monday. [European ETFs Show Signs of Life.]
Meanwhile, one of the euro-focused ETFs, CurrencyShares Euro Trust (NYSEArca: FXE), has dipped below $130 per share. John Spence for MarketWatch reports that FXE, which tracks the movement of the euro against the greenback, bottomed out at $118. 79 on June 8. It has bounced 9% since then, but is still down about 9% year-to-date. [ETFs for a Changing Sentiment.]
The currency markets were at least bolstered by the results of the European bank stress tests. But as long as safe havens have more appeal, investors may not flock to the euro in the kind of numbers it would need to sustain its impressive rally in recent weeks.
- CurrencyShares Euro Trust (NYSEArca: FXE)
- ProShares Ultra Euro (NYSEArca: ULE)
- ProShares UltraShort Euro (NYSEArca: EUO)
- Wisdomtree Dreyfus Euro ETF (NYSEArca: EU)
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero 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.