After the muted data on the U.S. economy, and with the U.S. dollar weakening against the Japanese yen and Swiss franc, traders are turning to the safe-haven currency exchange traded funds (ETFs).
The U.S. dollar depreciated to all-time lows against the Swiss franc and declined to a four-month low against the Japanese yen during trading, reports Gertrude Chavez-Dreyfuss for Reuters. The franc and yen quickly appreciated after data revealed a slower-than-expected U.S. economic expansion. [Swiss Franc, Yen ETFs Rally On Safe-Haven Status.]
“We are in a selective risk-off environment, with the Swiss franc and yen gaining,” remarked John McCarthy, director of foreign exchange at ING Capital Markets. “The GDP numbers were very much the catalyst this morning and we saw aggressive moves in the dollar/Swiss franc and dollar/yen.”
Japanese Finance Minister Yoshihiko Noda has given a warning on the strong yen currency, and he has hinted at a possible intervention if rates keeps moving higher, which has kept the yen from rising any further.
However, the U.S. dollar appreciated against commodity-linked currencies, including the Australian, Canadian and New Zealand dollars – commodity-linked currencies tend to falter when investors are risk averse.
- CurrencyShares Australian Dollar Trust (NYSEArca: FXA)
- CurrencyShares Canadian Dollar Trust (NYSEArca: FXC)
- WisdomTree Dreyfus New Zealand Dollar Fund (NYSEArca: BNZ)
CurrencyShares Japanese Yen Trust
For more information on global currencies, visit our currency ETFs 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.