Currency ETC Investors Contrarian On Yen, Euro

Investors in ETF Securities’ currency ETCs are positioned for a rebound in the US dollar against the yen, even as the Japanese currency hits 15-year highs against the US unit. ETC investors are also positioned for a rebound in the dollar against the euro.

The spot yen/dollar rate today hit a low of 84.73, breaching the 84.82 rate seen in November and reaching levels last seen in 1995, when the Japanese currency briefly traded below 80 to the dollar.

According to ETF Securities, the Morgan Stanley Long JPY Short USD total return index, tracked by the firm’s most popular ETC, has appreciated 35% in three years and over 10% in 12 months.

At the same time, ETC investors continue to position themselves for a dollar rebound. As at Friday 6 August, ETF Securities’ Short JPY Long USD ETC (LSE: SJPY) had attracted US$37 million in assets, compared to only US$130,000 in the Long JPY Short USD ETC (LSE: LJPY).

From the currency ETCs’ launch on 9 November 2009 to Friday 6 August 2010, LJPY appreciated by 4.63%, while SJPY declined by 6.57%.

Expressing a similarly bullish view on the dollar, investors in ETF Securities’ Short EUR Long USD ETC (LSE: SEUR) outweigh those invested in the firm’s Long EUR Short USD ETC (LSE: LEUR) by a factor of around ten to one.

SJPY accounts for 25% of ETF Securities’ overall currency ETC platform assets under management, according to the firm, while SEUR represents 14%.

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