“Franklin Templeton is betting the Reserve Bank of Australia will cut its cash rate two more times, reining in bond yields that have surged more than any other top-rated sovereign market over the past two months,” reports Bloomberg.[related_stories]
The iShares MSCI Australia ETF (NYSEArca: EWA) is one of this year’s best-performing non-leveraged, single-country exchange traded funds tracking a developed market. Although EWA is not a currency hedged ETF, one of the reasons it might be moving higher is the RBA’s loose monetary policy.
The looser monetary policy could support the economy but weigh on the AUD. Consequently, investors may track the markets through currency-hedged ETFs that try to mitigate the negative effects of a weakening Aussie, including the iShares Currency Hedged MSCI Australia ETF (NYSEArca: HAUD) and Deutsche X-trackers MSCI Australia Hedged Equity ETF (NYSEArca: DBAU).
Related: Aussie Dollar ETF Under Pressure
“A rally in commodity prices has also boosted the outlook for the country and Australia’s 10-year bond yield has climbed by more than half a percentage point since the end of August. That’s double the increase in comparable U.S. yields, which have been climbing on signals the Federal Reserve is likely to increase its benchmark next month,” according to Bloomberg.
iShares MSCI Australia ETF