While the forex market is a 24-hour-a-day operation, you can make things easier on yourself by making use of currency exchange traded funds (ETFs). Before you dive in feet first, read up on how currency ETFs work.
First and foremost, currencies are all about relationships.
The euro could depreciate further if Germany doesn’t bail out Mediterranean economies of the Common Market, and the Japanese yen could start to depreciate if its hudge deficit runs out of control, comments Will McClatchy for ETFzone. [Strong Japanese Yen ETF Puts Country in a Quandary.]
European currency-related ETFs include:
- WisdomTree Dreyfus Euro ETF (NYSEArca: EU)
- CurrencyShares Euro Trust (NYSEArca: FXE)
- iPath EUR/USD Exchange Rate ETN (NYSEArca: ERO)
- CurrencyShares British Pount Sterling Trust (NYSEArca: FXB)
- CurrencyShares Swedish Krona Trust (NYSEArca: FXS)
- CurrencyShares Swiss Franc Trust (NYSEArca: FXF)
- iPath GBP/USD Exchange Rate ETN (NYSEArca: GBB)
Japanese yen-related ETFs include:
- CurrencyShares Japanese Yen Trust (NYSEArca: FXY)
- WisdomTree Dreyfus Japanese Yen ETF (NYSEArca: JYF)
Investing in currencies is seen as a short-term strategy, since most currencies cycle in value. More economically turbulent countries experience currency devaluations for longer periods, and the their currencies tend to be more risky and vulnerable to geopolitical changes. [Currency ETF 101: What’s In It for You?]
The iPath Optimized Currency Carry ETN (NYSEArca: ICI) implements active management to carry trade low-yielding currencies that are borrowed and exchanged for high-yielding currencies. The PowerShares DB G10 Currency Harvest Fund (NYSEArca: DBV) is a similar fund that buys futures of three G10 currencies at low rates. Barclays Asian and Gulf Currency Revaluation ETN (NYSEArca: PGD) is an active fund with a regional focus. [Dollar ETFs: Not the Only Falling Euro Plays.]