Saturday, April 2, 2011

Currencies and ETFs: Yen Tumbles, Brazilian Real Shoots Higher, Dollar Tumbles or Rises? Depends!

Currencies moves are all relative. There were classic examples today. While investors in the U.S. were focusing on the "higher" U.S. dollar at the open, in Brazil it was quite the opposite. The U.S. opened significantly lower.

In fact, the dollar the trend continued throughout the afternoon. Yesterday, the dollar rose 0.06% and was quoted at R $1.63 at closing. At 16:05 today, the dollar dropped 1.10% to R $1.612, the lowest rate since August 2008!

Analysts say none other than the Central Bank (BC) Brazilian was hoping for positive activity data in the U.S. That positive data came in for the form of "good" unemployment figures, yet the dollar fell badly - in Brazil.

The ETF for the Brazilian currency is BZF (note that it had a huge distribution in December, that's the drop you see in various other charting systems). BZF is in fact trading at all-time highs:

And the 5y chart:

We track all currency ETFs live here.

Real 3 days, what a chart:

Yen 3 days:

 UUP 3 days:

Bottom line is don't believe what you read out there. It's all relative.

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