Currency ETF Winners & Losers Post Trump Win

The U.S. dollar received a fresh lifeline with Trump’s win in the presidential election. The currency has been downbeat this year on not-so-robust U.S. economic growth and low interest rates prevailing in the country (read: The Trump Effect: 8 Must-See ETF Charts).

Now, speculation about fiscal stimulus to be introduced by president Trump, low taxes, an easier regulatory environment and more domestic job creation took the greenback to a one-year high on November 14.

Needless to say, this dollar movement sent ripple effects to the other corners of the currency world. Let’s take a look at which ETFs won and which ones lost in the last five days (as of November 14, 2016) (read: Best Performing Currency ETFs of 1H16).

List of Winners

Greenback

As per Market Watch, the U.S. dollar index giving exposure to the greenback’s performance against six other currencies, is on its way toward the sixth successive advance. WisdomTree Bloomberg U.S. Dollar Bullish Fund USDU and PowerShares DB US Dollar Index Bullish Fund UUP added about 3.2% and 2.3% in the five days, though USDU and UUP are up about 0.3% and 0.7% so far this year (as of November 14, 2016), respectively.

Pound

This was a surprise winners post Trump victory. Bloomberg indicated that “sterling was the surprise winner from Trump’s victory as concern that political tension is on the increase outside Britain relieved the pressure caused by the June vote to quit the European Union.”

iPath GBP/USD Exchange Rate ETN (V:GBB) and CurrencyShares British Pound Sterling Trust FXB were the beneficiaries, though gains look unstable and may slide again if the Brexit process picks up pace. GBB and FXB were up 1.14% and 0.7% in the last five trading sessions (read: How to Play the Pound and UK ETFs Now).

List of Losers

Emerging Market Currencies

Most emerging marketsfell prey to greenback’s gains. Rising yields at home must have curbed demand for relatively high-yielder emerging market securities. As a result, WisdomTree Brazilian Real Strategy Fund BZF and CurrencyShares Chinese Renminbi Trust ETF (FXCH lost heavily in the last five trading sessions.

Other Losing Currencies

While the U.S. economy already embarked on the policy tightening path, Japan and Euro zone are still practicing ultra-easy monetary policies.

Also, Trump’s uncertain rather arguable stand on trade, immigration and global policies weighed on these currency ETFs. With his win, the existence of North American Free Trade Agreement (NAFTA) which had tied up the U.S., Canada and Mexico for more than two decades came under question.

Plus, the Obama administration has been negotiating the Trans-Pacific Partnership or pan-Pacific trade agreement among the 12 nations of the Pacific Rim. Countries like Japan and Australia are part of this. But Trump finds this deal not in the best interest of America (read: Foreign ETFs to Win or Lose on Trump Victory).

As a result, Japanese yen and Euro underperformed against the U.S. dollar hurting CurrencyShares Japanese Yen Trust FXY and CurrencyShares Euro Trust FXE. Same was the situation for CurrencyShares Swiss Franc Trust FXF, CurrencyShares Australian Dollar Trust (FXA) and CurrencyShares Canadian Dollar Trust (FXC).

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