Long Euro ETC Rallies as Eurozone Sentiment Continues to Improve …
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– The Euro posts third consecutive weekly gain, up 1.7%. ETFS Long EUR Short USD (LEUR) has risen by over 5% over the past month, buoyed by the positive results from the European Commission’s stress tests for the banking system. Market positioning remains negative the Euro (see positioning charts page 4), indicating that there is scope for further Euro gains as long as there is no new negative news from the Eurozone. In the mediumterm, however, with sovereign risks in Europe’s periphery still high, the underlying health of most Eurozone countries still weak and needed fiscal tightening likely to continue to drag growth down, recent Euro strength would appear to be temporary.
– Japanese Yen performs well, defying rise in risk appetite. Price action of Yen crosses is interesting because it indicates that investors remain risk averse despite the apparent improvement in investor sentiment recently. The emergence of risk appetite has historically been a negative influence for the Yen (and vice versa), however, the past week it has posted modest gains against the US dollar, the Euro and the British Pound. ETFS Long JPY Short USD (LJPY) gained 0.4%, while ETFS Long JPY Short EUR (SJPS) rose by 0.3% and ETFS Long JPY Short GBP (GBJP) rallied 1.2%.
– ETFS Long AUD Short GBP (GBAU) tops performance with 2.5% gains. With the European bank stress tests behind us and a number of key global macro data releases surprising on the upside investors took the opportunity to push the global growth sensitive Australian dollar higher. While market positioning remains positive (see page 4), the AUD still needs to convincingly break above its 200-day moving average.
– Volumes jump 70% over the past week, led by ETFS Short AUD Long USD (SAD). Investors began to unwind positions in the face of a strengthening Aussie Dollar, and SAD accounting for 60% of the weekly volume traded on the currency ETC platform.
Source: ETFWorld – ETFSecurities
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