Currencies ETF Comparison

OK, we’re going to have a few charts here. They will show various currency ETFs (Exchange Traded Funds) vs each other, based on a $US baseline (as that’s the currency of the charting site). Realize that these will not be exactly the same as the currencies, as there are various fees and ‘slippage’ in ETFs, and some of them use contracts (like options and futures) that can have “issues” with things like ‘rolling over’ being different when markets are in ‘backwardation’ vs. ‘contango’. (Relative cost for present vs future delivery).

A relatively complete list of currency ETFs, including some traded on non-US exchanges, is here:

First off, a 10 year weekly chart of some basic widely traded / used currencies.

Major Currency ETFs in $US

Major Currency ETFs in $US

Major Currency ETFs in $US 5 yr weekly.

FXF  - Swiss Franc
FXY  - Japanese Yen
FXB  - British Pound
FXE  - Euro
XRU  - Russian Ruble
FXS  - Swedish Krona
FXA  - Australia
FXC  - Canada
BZF  - Brazil Real
INR  - India Rupee

I think it’s pretty clear why the Swiss Frank and Japanese Yen have traditionally been inflation protection currencies. Looks like the Australian Dollar has joined them recently.

I generally treat the Swiss Franc and Japanese Yen as the most stable currencies, though in the last few years (decade+?) the Swiss have become more “active managers” to prevent too much currency rise. Japan has just announced a very loose currency policy too, so is noticing the relatively higher currency and may be trying to drive it down. The Swedish Krona usually trades close to the Euro, but longer term looks to follow an unknown ‘basket’ ( I notice it is close to the Canadian Dollar in this chart). FXM is supposed to give the Mexican Peso, but BigCharts was giving some other stock, so it’s not on the chart. Generally showing strength vs the $US though (per CNBC)

The Indian Rupee is that one on the bottom with the large jaggy spikes in it… An ambitious person might be able to ‘provide liquidity’ at those extreme points and make some cash. And the Brazilian Real drops at the start, does a ‘dead cat bounce’ of sorts, and is now just laying there. They elected a more ‘activist’ Socialist and have been a money loser ever since. Both of these were very promising economies a few years back, then their governments decided to “fix something” and they’ve been a bit doggy ever since.

It also looks like the “Commodity Currencies” of the Australian and Canadian Dollars have joined the Yen and Swiss Franc as reasonable ‘store of value’ currencies longer term, though the Canadian is not as strong as the Australian Dollar. BNZ is supposed to give the New Zealand currency, but BigCharts has it mapped to “Ballast Nedam N.V. Cert. (FRA)” instead. They really seem to ‘have issues’ with the lesser traded currency ETFs. At any rate, the New Zealand dollar is doing nicely, too. Just not something I can graph. (Wonder if I ought to look for a different charting site…)

Overall impression is that the Euro and $US are in trouble, and some ‘Third World’ currencies are even worse. For anyone wondering, CNY the Chinese Yuan (Renminbi) is mostly pegged to the $US so is a nearly flat line if graphed though has a 4% or so rise over the decade as they “adjust the peg” under political pressure. A token change at best.

OK, here’s what it looks like over a one year period, daily tick marks. Not much going on shorter term (other than that Brazil plunge about to roll off the end of the chart and some ‘spikes’ in the thinly traded FXS Swedish Krona fund.) I’ve left off the Indian Rupee as it just too spiky. Interesting to note that the Russian Ruble had a rise, then rolled down in the last two months. Perhaps worth watching Russia more closely.

Major Currency ETFs in $US 1 year daily tick

Major Currency ETFs in $US 1 year daily tick

Now this is another interesting chart. It has several key metals on it, along with a dollar directional ETF, and some minor currencies.

US Dollar direction vs key metals and minor currencies

US Dollar direction vs key metals and minor currencies

UUP  - $US Leveraged Up (opposite is UDN  for 'dollar down' bet)
GLD  - Gold ETF
PPLT - Platinum ETF
JJC  - Copper ETF
DBV  - PowerShares DB G10 Currency Harvest Fund (ETF)
CEW  - "Emerging" Currencies ETF
SLV  - Silver ETF
UDN  - $US Leveraged Down (opposite is UUP for 'dollar up' bet)
TIP  - Treasury Inflation Protected Bonds
WIP  - World Inflation Protected Bonds

UUP is a bet that the dollar will rise vs a basket of other currencies. Significant Euro weighting, IMHO. UDN goes the other way, a ‘down us dollar’ bet.

Here you can see why I’m less than enthusiastic about precious metals as a ‘steady store of value’. Notice how they swing strongly back and forth? They are fairly thinly traded compared to paper currencies and they have large swings of demand with the economy. As a ‘natural currency’ that can be a feature. During economic downturns, gold becomes more available, due to lower demand for consumption, so naturally ‘stimulates’. During economic boom times, it becomes more scarce due to higher demand, rather like the central bank ‘tightening’. But as a ‘store of value’ they are a bit volatile.

For trading that can be a nice feature. Buy on the low swings, sell on the up swings.

DBV is a ‘strategy’ currency fund. It looks to outperform simple currencies. It might be worth looking into the strategy to see what it does.

Generally, as a simple ‘store of value’ the TIP works best. As my bills are in US Dollars, I like the stable basis with inflation protection. WIP is the same thing in ‘world currencies’ that is like the basket used by UUP/UDN IMHO. It ought to work well for folks in Euro Land. (It is presently outperforming TIP as the dollar is having issues vs the Euro).

You can see WIP as the main ticker on BigCharts here.

So that’s why I’ve generally been saying to go into inflation protected bonds as a ‘store of value’ rather than gold or silver. Metals are for trading, not for hiding-out / security.

OK, my general ‘take’ on this, in the context of the looming massive debt problem, is that WIP / TIP are likely the most stable and reasonable way to ‘store value’ without much worry. Trading in gold and silver (and platinum / palladium) make sense on about a ‘every few months’ basis. Some “unusual” currencies look to be holding value more than most. The Australian Dollar, the Russian Ruble, and even the Mexican Peso… (though not charted). The Yen and Swiss Franc are longer term good ideas, but short term need watching as they are being ‘managed’ toward lower exchange rates. In general, ‘commodity currencies’ look to have more stability than ‘New Socialisms’ like the USA.

So that’s where I’m going to park my cash. Not in dollars US, but in Australian Dollars and Swiss Francs and maybe even some Russian Rubles. While longer term ‘static’ funds go into WIP and TIP and I keep an eye on the FXY yen to see what the Japan Central Bank does to it, and does that make a buy or sell moment. What I’ll not be doing is holding piles of $USD or Euros.

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About E.M.Smith

A technical managerial sort interested in things from Stonehenge to computer science. My present "hot buttons' are the mythology of Climate Change and ancient metrology; but things change...
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1 Response to Currencies ETF Comparison

  1. philjourdan says:

    Thanks for the summary. I will incorporate it into my current plans.

Comments are closed.