US Dollar Gains as Economic Recovery Fades;
Elections in Focus for Aussie Dollar …
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– US Dollar strengthened most against Swedish Krona last week, as equities slid on uncertain outlook. ETFS Short SEK Long USD (SSEK) rallied 3.1% as equities began to slide following dovish comments about the prospects for the US economy by the FOMC.
Remerging concerns about the possibility of sovereign debt defaults gave Long USD Short EURO (XBJP) a 2.4% boost ahead of key Eurozone government bond auctions. Accordingly, investors unwound positions in ETFS Short USD Long EUR to the tune of $5mn last week.
– Australian elections and rising risk aversion likely to keep Aussie on backfoot. The Australian dollar will be in particular focus with the federal elections scheduled for this weekend. The incumbent Labour government remains tied to its mining tax reform proposal, which could put the Aussie under further pressure if they are elected. With diminishing support from interest rates, the Australian Dollar remains particularly vulnerable if the global economic recovery continues to falter.
– Short Swiss Franc ETC outflows indicate growing investor caution. ETFS Short CHF long EUR (SCHE) saw in xcess of $8mn outflows last week, as investors appeared to pare bets that risk aversion would recede. Investors remain strategically positioned for further US Dollar strength, with ETFS Short JPY Long USD (SJPY) the most favoured position of investors, accounting for 29% of AUM. ETFS Short Euro Long USD (SEUR) remains the second most favoured position, accounting for 16% of funds.
Source: ETFWorld – ETFSecurities
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