U.S. investors saw setbacks in their currency-linked returns in Indian and Canada in the week ended Oct. 19, as the rupee and the loonie weakened. But euro strength boosted returns for U.S. investors amid signs the continent’s debt crisis was, for the moment, easing.
Take a complete look at our detailed weekly Currency Impact Report that comes to us courtesy of MSCI, and note that the key talking points of last week's data:
- We saw huge movements in India last week. U. S. investors in India saw returns of -1.97 percent while local investors in India saw returns of -0.21 percent—a difference of -1.76 percent due to a rapid drop in the price of the Indian rupee relative to the dollar. The rupee saw the worst weekly drop since June amid speculation that importers were buying up U.S. dollars to meet payments on imported goods.
- In Canada, we also saw U.S investors fall well behind their local Canadian counterparts as the depreciation in the Canadian dollar resulted in a difference of -1.25 percent between U.S. investors and local investors over the course of the week. Recent inflation data from Canada is pointing to lower-than-forecast consumer prices. The consequence of that is that the Bank of Canada is less likely to raise rates and, as a result, we’ll likely see a continued pullback from traders who might be leaning toward a risk-off approach with the Canadian dollar.
- In the eurozone, we saw a slight boost for U.S. investors over the course of the week of about 0.50 percent. It’s still too early to tell if currency traders are really pushing for a risk-on play with regard to the euro, but there’s definitely a sense that the sovereign debt crisis seems to be easing. European officials appear to be committed to their goal of establishing a euro-area bank supervisor by Jan. 1, 2013.