Three ETFs To Watch This Week: XLF, GXG, UUP

by on March 15, 2010 | ETFs Mentioned:

Despite a relative paucity in major earnings reports and regular statistical releases, the upcoming week could be a busy one for domestic and international equity markets. After conflicting reports on the health of the economy last week–retail sales figures were up but consumer confidence trended lower–all eyes will be on the Fed this week as the market searches for guidance in order to give direction to stocks in the near future.

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

Financials Select Sector SPDR (XLF)

Why XLF Could Be On The Move: Chris Dodd, the Chairman of the Senate Banking Committee, is scheduled to unveil his financial reform bill on Monday at 2pm ET.

What To Watch For: Several key details of the highly anticipated bill were released over the weekend, revealing that the latest iteration will consolidate banking regulators and create a new consumer watchdog agency within the Federal Reserve. The extent to which the full bill impacts Wall Street banks, as well as the initial reaction to the plan from legislators, could significantly impact financial ETFs. One area of focus is the scope of power given to the proposed Consumer Financial Protection Agency. Another area of interest to investors is the so-called Johnson Fiduciary Amendment, which asks that the Securities and Exchange Commission (SEC) conduct a study “to determine appropriate obligations” of advisors and brokers, ultimately leading to new rules at the completion of the study. 

Global X/InterBolsa FTSE Colombia 20 ETF (GXG)

Why GXG Could Be On The Move: The results from the weekend’s Colombian legislative elections should be known early this week.

What To Watch For: These elections, in which all of the senators and representatives will be decided, should give some indication of what to expect from presidential elections scheduled for late spring. Should the Social National Unity Party win handily, it could bode well for Juan Manuel Santos, who is seen as the successor to current president Alvaro Uribe. Uribe is barred from running for a third term, but a continuation of the popular leader’s policies and economic reforms could promote stability in the South American country.

PowerShares DB USD Index Bullish (UUP)

Why UUP Could Be On The Move: The FOMC meets on Tuesday.

What To Watch For: While it is almost a certainty that the Fed will not make any major announcements this week, details from the meeting will be intensely scrutinized by investors looking to glean details on the “exit strategy.” Some Fed members have criticized the phrasing of  the Fed’s vow to keep interest rates close to zero for an “extended period,” saying that is is restricting their room to maneuver as the economy recovers. This week’s meeting will be particularly interesting in the wake of reports that president Obama intends to nominate Janet Yellen to become the next vice chairman. Yellen is widely considered to be a dove on monetary policy, meaning that she is more concerned about high unemployment than rising inflation.

Last Week’s ETFs To Watch

EWI: The fund finished up 2.5% from the lows of the week despite weakness from component ENI Spa.

BNZ: This fund dropped roughly 1.5% between trading on Wednesday and Thursday, but regained its lost ground to finish the week in the black.

EWL: Swiss markets faced a choppy midweek period, but finished the week little changed after a meeting of the Swiss National Bank.

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Disclosure: No positions at time of writing