Global markets rose last week amid thin trade surrounding the U.S. Thanksgiving holiday, but that didn’t stop some currency moves from affecting investment returns, notably for those investing in Israel, where a cease-fire ending hostilities with Hamas pumped up the shekel.

The yen also weakened amid continued expectations for new monetary easing, while the euro resumed a downward trajectory as the market began to focus on separatist sentiment within  heavily indebted Spain.

Fluctuating currency crosses, as shown in our weekly Currency Impact Report, don’t become real gains or losses until U.S. investors exit those positions. Nevertheless, they have become a much bigger—and underappreciated—part of returns in modern globalized investment markets.

Below are last week’s noteworthy talking points on the currency front:

• Currency movements were minimal last week as investors in the U.S. prepared for Thanksgiving in the post-electoral environment.
• The Israeli shekel rallied in the wake of a cease-fire agreement in the Gaza strip. As a result, U.S. investors in Israel saw returns of 2.23 percent, while local investors in Israel saw returns of 0.48 percent. Investors in the iShares MSCI Israel Capped ETF (NYSEArca: EIS) experienced enhanced returns of 5 percent over the course of the week as a result of cease-fire.
• The euro rallied over the course of the week, bringing a return differential of 1.15 percent between U.S. investors in Europe and their local counterparts. On Sunday, the euro fell again, breaking its five-day gain after pro-independence parties in Catalonia, Spain, won a regional election driving a push for secession from the European Union. As the market shifts to focus on Spain, investors will look ahead in the next few weeks to see if European nations can survive another round of financial assistance to its weakest members without threats of an exit.
• The Japanese yen dropped sharply against the dollar over the course of the week, as the Bank of Japan continued its expansionary efforts. The yen’s continued weakening against the dollar is expected to boost exports as 2012 comes to a close. Still, U.S. investors in Japan saw returns of 0.38 percent over the course of the week, lagging behind their local Japanese counterparts, who saw returns of 1.91 percent.