As the autumn quarter draws to a close, many investors have begun to reflect on the immense level of change that the global economy has experienced in this relatively short time period. Arguably one of the biggest reversals took place in the currency markets, where fears over the health of the eurozone subsided and were replaced by concerns over the dollar and the long-term effects of another bout of QE from the Fed. However, the euro is not yet out of the woods either as the currency appears to be starting this quarter the way it started the previous one -- with questions about the health of the economies of some of the peripheral eurozone nations such as Ireland, Portugal, and Greece.

While these nations have struggled, their economic pain is the gain of large exporters who have benefited greatly from these nations' ability to hold down the value of the euro and keep European exports cheap and flowing to emerging markets and North America. Yet these comparatively small markets stood no chance against the rising tide of resentment towards the Federal Reserve's QE2 policy, which many see as a deliberate attempt to debase the dollar and boost American economic growth through more plentiful exports.

This situation has led to a rocky road for the euro against the greenback; the common currency has lost over 3.3% in the past week thanks to escalating worries over debt crises -- especially in Ireland -- but has gained close to 6% against the dollar in the past quarter, and 8.1% over the past half-year period. Due to this choppy currency market, investors should take a closer look at today's eurozone GDP growth report for the third quarter of 2010. Analysts are projecting a quarter-over-quarter growth rate of 0.5% compared to the second quarter, which saw a more robust 1.0% level of QoQ growth. Meanwhile, year-over-year figures are expected to remain at 1.9% for the third-quarter estimates. "This year growth looks fairly robust in the euro area, and the big driver of this forecast surprise has been the growth in Germany, where the recovery shows no signs of slowing down at the moment," said Jens Sondergaard, senior European economist at Nomura International [see The Next Frontier of ETF Investing: Long/Short Trades].

Due to this GDP growth report, we have decided to make the iShares MSCI EMU Index Fund (NYSE: EZU) today's ETF to watch. The fund tracks the MSCI EMU Index which measures the performance of equity markets of the EMU member countries: those members of the European Union who have adopted the Euro as its currency. The top country holdings go to France (31.1%), Germany (25.3%), and Spain (11.8%) with modest allocations also going to Italy and the Netherlands. In terms of sectors, financials take the top spot with 22.1% and are trailed by industrial materials and consumer goods, which both make up roughly 16% of the total assets in the fund [read Which Euro ETF Is Right For You?].

2010 has been a rough year for EZU; the fund has slid by 3.9% year-to-date and has lost 7.3% over the past 52 weeks. However, the fund has gained close to 12.3% over the past quarter, suggesting that fears may be subsiding in many European markets, at least for the time being. If the EMU countries are able to post robust growth and beat out economist expectations, look for EZU to close out the year on a strong note. If however, the recent strength of the euro weighs on growth levels in major exporting countries such as Germany, it could choke off the budding recovery for the struggling region and send EZU down during Friday trading [also see Three ETFs For Betting Against Europe].

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