Currency ETFs: How to Play Their Fickle Moves | ETF Trends

Currency exchange traded funds (ETFs) are moving every which way these days, and it all seems to depend on how investors are feeling at the moment. Here’s how you can play their fickle feelings.

Although the dollar has been seeing some renewed strength, it’s falling against the Japanese yen and the Swiss franc. The U.S. dollar fell 1.3% against the franc, while the dollar was at 85.37 yen from 86.30 yen, reports Frances Mcinnis for The Wall Street Journal. [Why China’s Trade Numbers Hurt ETFs.]

Meanwhile, the euro advanced against the dollar despite concerns about an upcoming Irish government bond sale on Tuesday. Speculation that Japanese officials are getting closer to intervening in currency markets to counter excessive yen strength also seems to be gaining credence.

According to Fresh Plaza, the Dollar Index has broken its longest stretch of weekly losses in more than five years, even when factoring in the renewed yen strength today. Concerns that the global economic recovery is fueling the investor appetite for safe havens. Enter the dollar. Year-to-date, the greenback is up 4.5%. [What Are Currency Traders Betting On?]

Visit our currency page for more stories about currency ETFs. You can easily play currency ETFs and see what’s trending by visiting the ETF Analyzer. How do you select them? We look for areas that are moving in a positive direction by watching a fund’s relationship to its long-term trend line (the 200-day moving average). You can read more about trend following here.

Among the many options for playing currencies these days include:

  • Wisdomtree Dreyfus Euro ETF (NYSEArca: EU): up 2.1% in the last month
  • PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP): up 4.5% year-to-date
  • CurrencyShares Japanese Yen Trust (NYSEArca: FXY): FXY is 4.6% above its 200-day moving average, more than any other currency ETF right now
  • WisdomTree Dreyfus Brazilian Real (NYSEArca: BZF): 4.4% above its 200-day; up 2.3% year-to-date
  • CurrencyShares Swiss Franc (NYSEArca: FXF): up 7.4% in the last three months

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.