European equity ETFs were also deep in the red with iShares MSCI Italy (NYSEArca: EWI) pacing the declines with a nearly 3% sell-off. The iShares MSCI Germany (NYSEArca: EWG) fell 2.3% after European Central Bank President Mario Draghi said the lingering debt crisis is weighing on the region’s largest economy.
CurrencyShares Euro Trust (NYSEArca: FXE) was lower Wednesday as the attention turned to European sovereign debt after the U.S. presidential election. Since mid-October, the dollar has been rising as the euro weakens.
“Obama’s re-election means political and Federal Reserve business as usual in the U.S.—but also means plenty of uncertainty surrounding the fiscal cliff,” said John Hardy, currency strategist at Saxo Bank, in a MarketWatch report. “Ironically, the worse [the threat from]the fiscal cliff, the better the dollar will likely do because the U.S. dollar is so linked to global risk appetite and the threat of a U.S. recession would likely see the dollar appreciate” on safe-haven flows, he added.
Full disclosure: Tom Lydon’s clients own GLD.