ETF Spotlight on CurrencyShares Australian Dollar Trust (NYSEArca: FXA), part of an ongoing series.

Assets: $821 million.

Objective: The CurrencyShares Australian Dollar Trust tries to track the price movement of the Australian dollar against the U.S. dollar.

Holdings: The trust maintains a deposit account denominated in Australian dollars.

What You Should Know:

  • Rydex|SGI is the sponsor of the ETF.
  • FXA has an expense ratio of 0.40%.
  • The fund is down 0.68% over the past month, down 0.61% over the last three months, but up 4.29% year-to-date.
  • Any interest accrued in the deposit account will be used to pay trust expenses, and any excess interest will be distributed to shareholders monthly. The fund has a 12-month yield of 3.66%.
  • “Those hoping to speculate on the Australian dollar should be wary, as predicting short-term movements in currencies remains a nearly impossible task that has flummoxed academics and traders for decades,” Morningstar analyst Michael Rawson cautions.
  • “The Australian dollar has strengthened significantly due to strong commodity exports to Asia as well as fiscal and monetary stimulus measures of the U.S. government,” Rawson added. “Because of the Australian economy’s heavy reliance on mineral wealth, its currency often rises and falls with commodities.”

The Latest News:

  • The Australian dollar rose Tuesday on speculation the Reserve Bank of Australia won’t cut interest rates this year, Bloomberg reported.
  • The Australian dollar’s slide in recent weeks is due to its risk profile and close ties to commodity markets, MarketWatch reported.
  • The ETF is trading around its 200-day exponential moving average.
  • Concern over Europe’s ongoing debt crisis has weighed on the Australian dollar, reports Enda Curran for Dow Jones Newswires.
  • “It is likely that we continue to skip from high stress levels to short-term solutions for the time being. This is likely to keep the euro and the Australian dollar under pressure and volatility levels high in FX – and indeed other markets,” Emma Lawson, FX strategist at National Australia Bank, commented.

For past stories in this series, visit our ETF Spotlight category.