Three ETFs To Watch This Week: VXX, FXA, ECH

by on March 1, 2010 | ETFs Mentioned:

Equity markets were choppy last week as investors digested a slew of data regarding all facets of the economy. Consumer confidence was sharply lower, while unemployment claims rose and existing home sales sunk, calling into question the strength of a global recovery. Across the Atlantic, investors remained worried about the future of the euro as continued Greek troubles weighed on European markets after the EU rejected a Greek austerity plan, saying that it was about $5.4 billion short of what was needed.

Below is a look at three ETFs that could be on the move this week amidst central bank meetings, data releases, and scrutiny of the global economy:

iPath S&P 500 VIX Short-Term Futures ETN (VXX)

Why VXX Could Be On The Move: The unemployment rate, non-farm payrolls, and average workweek hours are all released on Friday at 8:30 AM (EST).

What To Watch For: After an unexpected increase for unemployment insurance claims last week, all eyes will be on the employment report later this week to see if job losses will continue. The market is expecting a modest uptick in unemployment, to 9.8% and a slight reduction in hours worked per week, down two-tenths of an hour to 33.7 hours per week. If the actual numbers are much higher or lower than these, volatility futures, the underlying holdings of VXX could be on the move (read some warnings about investing in VXX in this feature).

Rydex CurrencyShares Australian Dollar Trust (FXA)

Why FXA Could Be On The Move: The Reserve Bank of Australia meets on Monday.

What To Watch For: The Australian economy seems to be picking up steam, and is seen by some to be the safest developed market available to investors. With a current interest rate of 4.0%, the RBA maintains significant flexibility in monetary policy, something that most developed markets, especially Japan and the United States, lack. Nevertheless, markets are pegging the chance of Australia hiking its rate at 40%, with most analysts believing that the Bank will have a hawkish policy for the rest of the calendar year. If the RBA does hike rates it could further boost the Aussie dollar, which has performed very well over the past 52 weeks against the greenback. FXA has posted a gain of 38% over that same period.

iShares MSCI Chile Investable Market Index Fund (ECH)

Why ECH Could Be On The Move: A massive 8.8 magnitude earthquake hit off the coast of Chile on Saturday morning, killing at least 700 and causing untold amounts of damage.

What To Watch For: Chilean equity markets are scheduled to conduct business as usual on Monday morning, and the Chile ETF figures to be trading at record volumes. With the scope of the quake’s damage difficult to judge, ECH could see some major price swings over the week as information trickles out. Read more about the earthquake and its impact on the Chile ETF here.

Last Week’s ETFs To Watch

XLI: After a two percent drop to start the week, XLI rallied to end the week back where it started on Monday thanks to positive manufacturing news to finish February.

OIH: At one point during the week, OIH was down more than 5.5% from its Monday high but the fund stormed back in Thursday and Friday trading, gaining more than 2.5% from its low for the week.

EWZ: This Brazilian equity fund had a rocky week: from its highs on Monday morning the fund sunk more than 8% to its low for the week at the beginning of trading on Thursday. However, EWZ charged higher, finishing the week down only 2%.

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Disclosure: Eric is long EWZ