Global stock markets began to nosedive from late February onward amid panic selling over the rapidly spreading coronavirus pandemic. Global trade is almost stalled, cities in various countries are on lockdowns and flight services face a tremendous capacity cut. All these are surely making a huge impact on the currency world (read:
ETFs to Play as Dow Heads to Worst Month Since Great Depression).
Let’s analyze which currency ETFs won and which lost in the past month (as of Mar 25).
Winners Dollar WisdomTree Bloomberg U.S. Dollar Bullish Fund (Up 5% USDU Quick Quote USDU - Free Report) —
The U.S. dollar has been a true star during the month-long heightened coronavirus crisis. Acute global market sell-offs as well as rampant lockdowns and quarantine are prompting investors to sell everything to hoard cash in the U.S. dollar.
Invesco DB US Dollar Index Bullish Fund (hasalso added 2.3% in the past month (read: UUP Quick Quote UUP - Free Report) U.S. Dollar Climbs: ETFs to Gain/Lose). Invesco CurrencyShares Euro Currency Trust (— Down 0.04% FXE Quick Quote FXE - Free Report)
The euro scaled an eight-month high in early March after the Federal Reserve’s interest rate-cut. That drove the common currency up by
more than 5% from its late-February lows. However, a gigantic stimulus launched by the ECB cut some strength off the common currency later on (read: ETFs to Gain on ECB's Coronavirus Emergency Stimulus Rollout). Invesco CurrencyShares Swiss Franc Trust (— Down 0.12% FXF Quick Quote FXF - Free Report)
Swiss franc is known to be a safe-haven asset and it lived up to its status in the current turmoil too. Though many are persuading the Swiss National Bank (SNB) to
cut interest rates and increase asset purchases to fend off the downside economic risks associated with the coronavirus outbreak, the bank has not taken any action in that direction. Besides being a safe asset, SNB’s move kept Swiss franc almost steady in the past month. Losers Market Vectors-Rupee/USD ETN — Down 34.9%
Rupee has been one of the
worst-performing currencies this year, thanks to selling in Indian equities and other financial assets. The strengthening of the greenback against global currencies hit by the pandemic also caused the rupee loss. Invesco CurrencyShares Australian Dollar Trust (— Down 9.4% FXA Quick Quote FXA - Free Report)
The Aussie dollar is considered
a proxy for risks. Australia has great trade relations with China, the epicentre of the ongoing turmoil in the market. Since global coronavirus sell-off sparked a safe-haven rally, Australian dollar has depreciated in the past month. Invesco CurrencyShares British Pound Sterling Trust (— Down 7.9% FXB Quick Quote FXB - Free Report)
United Kingdom has been one of the worst-hit countries in Europe, which pulled down the currency fund in mid-March. However, the fund started to recover ever since the Bank of England (BoE) cut rates to a record low level of 0.1% and
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