Last week started off with a rather slow “Cyber Monday,” with equities skimming along the flat line for the majority of the day. Following the pseudo-holiday, Wall Street shifted its attention once again to the Washington, as mixed commentary on the progress of the fiscal cliff talks dominated the markets. Senate Majority Leader Harry Reid first reported that there had been “little progress,” then went on to express his optimism about the budget talks, stating that while Republicans are still opposed to raising taxes, they are willing to make the sacrifice as long as appropriate spending cuts are made. During a White House event, President Obama also emphasized that his hope “is to get this agreement done before Christmas.” This week, investors will once again see a number of economic reports from around the world. Below, we outline three ETFs that should see a fair amount of activity during the week ahead [see also 7 Simple & Cheap ETF Model Portfolio]:
1. Industrial Select Sector SPDR Fund (XLI)
Why XLI Will Be in Focus: This fund is one of the most popular on the market, with over $3.2 billion in assets and an average daily volume just over 11 million. XLI seeks to replicate the performance of the U.S. industrial sector and will be in focus this week as ISM manufacturing for the month of November is slated to come out on Monday. In the previous report, the ISM manufacturing index rose 0.2% in October to 51.7, just above the 50-point threshold indicating industry growth. For the month of November, however, analysts are expecting a slight slowdown, with the figure coming in at 51.5 [see also 17 ETFs For Day Traders].
2. CurrencyShares Australian Dollar Trust (FXA)
Why FXA Will Be In Focus: This fund is by far the largest and most popular options for investors looking to gain exposure to the price of the Australian dollar relative to the U.S. dollar. It will be in focus earlier in the week, as the Reserve Bank of Australia is slated to announce its bank rate decision on Tuesday and the nation’s GDP is reported on Wednesday. Analysts are expecting the central bank to cut its rate by 25 basis points, from 3.25% to 3.00%, while GDP (QoQ) is expected to remain the same at 0.6%. Investors should expect increased trading activity and possible volatility for this ETF.
3. Euro Debt Fund (EU)
Why EU Will Be In Focus: This fund offers a way for investors to gain pure play exposure to European debt markets. Currently, EU has a heavy tilt towards debt securities from the “safer” European countries such as Germany, France, Luxembourg and Belgium. Investors should keep a close eye on EU this week as the eurozone’s bank rate is reported on Thursday. Analysts expect the rate to remain the same, though any commentary from the central bank could mean higher levels of activity for this ETF [see also How To Pick The Right ETF Every Time].
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Disclosure: No positions at time of writing.