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Tale Of Two Instruments – Same Market Different Daily Returns

|Includes:DFJ, CurrencyShares Japanese Yen Trust ETF (FXY), NKY

Nikkei 225 Index

The iShares MSCI Japan Index ETF opened 1% down and closed unchanged.

The Nikkei 225 Index closed up almost 3% previous night.

So what happened ???? Why is the Japan ETF so much out of sync compared to the Nikkei 225 Index ?

In this chart, FXY is proxy to the Japanese Yen. We can see that in the one month period, Nikkei 225 Index jumped up by 17.82%, but then Japanese Yen has fallen 7.33%. Since the ETF EWJ is represented in US $ terms, it is able to rise only 8.89%. Its underperforming the Nikkei 225 because the dollar is gaining strength vs the Yen.

Disclosure: I am long DFJ.

Stocks: FXY, DFJ, NKY