Currency ETFs Realign With Perspective on Recent Crises

 |  Includes: FXA, FXF, FXS, FXY
by: MyPlanIQ

Over the past two weeks, we have seen fast paced development of world events push each other to the background. The human tragedy in Japan was pushed back by the technological scare of radiation poisoning which was overshadowed by Libya, Yemen and Syria. Around the world, sovereign governments have been dealing with their debt and austerity budgets and the host of protests over cuts.

We have seen markets bounce up and down as investors either look for safety and bargains and it's easy for the long term investor to suffer whiplash.

We continue to report on currencies by using representative ETFs to uncover whether there are possible longer term investments that can be made to help provide greater diversification to a portfolio to help improve the potential for risk adjusted returns.

Assets Class Symbols 03/23
Swedish Krona FXS 7.03% 4.19% ^
Swiss Franc FXF 6.68% 8.05% v
Australia Dollar FXA 5.67% 2.06% ^
Euro FXE 4.55% 2.97% ^
US Dollar Bearish UDN 4.47% 3.27% ^
Japanese Yen FXY 4.34% 6.65% v
British Pound FXB 3.87% 1.64% ^
Mexican Peso FXM 3.64% 2.05% ^
Canadian Dollar FXC 2.95% 0.75% ^
Brazilian Real BZF 1.66% -2.66% ^
G10 Carry Trade DBV 0.95% -3.11% ^
Chinese Yuan CYB 0.29% -0.16% ^
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The trend score is defined as the average of 1, 4, 13, 26 and 52 week total returns (including dividends being reinvested).

All currencies except the Japanese Yen were up this past week. It is not surprising that the Yen is down as central banks are doing their best to keep the Yen down to help Japan in their current crisis. Currencies have been under pressure over the last couple of weeks and this is the start of a recovery.

We note significant change in the league table -- over the past few months, we have seen the Krona replace the Aussie Dollar at the top of the table -- but things were relatively stable. Over the last couple of weeks there was significant juggling of the order.

The Swiss Franc jumped to the top of the list and the Yen, Dollar and Euro popped into the top half of the list, this week, we see the order return to its pre-crisis state.

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The Aussie Dollar and Swedish Krona have been impacted by the recent crisis -- oil prices and commodity prices are liable to weigh on the Australian economy. The Swedish economy, while not closely tied to Europe, will be impacted by oil prices and worries of slower growth.

The Swiss Franc is the currency that marches to the beat of its own drum in times of increased risk. It has clearly spiked as tension heightened and is dropping as tension reduces.

The Real and the Yuan are both good long term bets but continue to have a range of issues related to sovereign governance. Until they are sorted out, they are likely to remain at the bottom of the return table.

There is opportunity trading currencies for those with the intestinal fortitude. For those who have a longer term horizon, it is possible to consider adding the Swiss ETF in a portfolio to hedge against world crises.

Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.