Investors will be watching the euro Thursday after the European Central Bank raised interest rates as widely expected.
The euro has powered to a 15-month high, taking related exchange traded funds (ETFs) such as CurrencyShares Euro Trust (NYSEArca: FXE) along for the ride as markets positioned for a rate increase from the ECB, which boosted its key rate by a quarter-point to 1.25% on Thursday.
The euro’s rise has further impaired the U.S. dollar. [Euro’s Record Quarter Boosts Currency ETFs.]
The ECB’s interest-rate decision is ratcheting up speculation in the euro. In the U.S., meanwhile, the government standstill looms while Republicans and Democrats are in a stalemate over the budget.
The ECB made its first hike in nearly three years on Thursday as it frets about inflation.
PowerShares DB US Dollar Bullish Fund (NYSEArca: UUP) has been forced to flirt with its 52 week-low. As the commodity markets remain healthy and the euro continues to advance, the U.S. dollar may face an upward battle. [Euro’s Record First Quarter Buoys Currency ETFs.]
Other euro currency plays:
- WisdomTree Dreyfus Euro (NYSEArca: EU) up 2.8% over past week
- ProShares UltraShort Euro (NYSEArca: EUO) down 2.9% over past week; note this ETFs plays the downside of the currency
CurrencyShares Euro Trust
Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.
Tisha Guerrero contributed to this article.