ETFS Long EUR Short USD has risen by over five per cent over the past month, buoyed by the positive results from the European Commission’s stress tests for the banking system, according to ETF Securities.
Market positioning remains negative the Euro, indicating that there is scope for further Euro gains as long as there is no new negative news from the Eurozone.
In the medium-term, 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.
ETF Securities says the 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 gained 0.4 per cent, while ETFS Long JPY Short EUR rose by 0.3 per cent and ETFS Long JPY Short GBP rallied 1.2 per cent.
ETFS Long AUD Short GBP has topped performance with 2.5 per cent 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, the AUD still needs to convincingly break above its 200-day moving average, says ETF Securities.
Volumes jumped 70 per cent over the past week, led by ETFS Short AUD Long USD. Investors began to unwind positions in the face of a strengthening Aussie Dollar, and ETFS Short AUD Long USD accounted for 60 per cent of the weekly volume traded on the currency ETC platform.
