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Bullish On The U.S. Dollar? Here's An ETF Worth Considering

By Investing.com (Tezcan Gecgil/Investing.com )ETFsJul 07, 2021 04:51AM ET
www.investing.com/analysis/bullish-on-the-us-dollar-heres-an-etf-worth-considering-200590102
Bullish On The U.S. Dollar? Here's An ETF Worth Considering
By Investing.com (Tezcan Gecgil/Investing.com )   |  Jul 07, 2021 04:51AM ET
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FXY
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FXC
+0.18%
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UUP
-0.09%
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FXB
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Currency exchange-traded funds (CETFs) enable retail investors to participate in currency moves. These funds cover most major currencies as well as a number of currencies that are not always in the headlines.

There are both long and inverse (short) position ETFs, and more recently, leveraged (double and triple long and inverse) funds that use derivative products, which might be more appropriate for short-term trading.

In the past 12 months, the US Dollar Index Futures is down about 5%. The index is a widely-followed benchmark, which measures the value of the greenback relative to a basket of six currencies from the leading trading partners of the US.

Dollar Index Weekly
Dollar Index Weekly

Since the second half of June, the USDX has witnessed its best trading timeframe in well over a year. Tailwinds came from the Federal Reserve, which announced a hawkish sentiment towards future interest rate hikes. Analysts are debating whether potentially higher rates and tightening liquidity could mean a sharp rebound in the greenback. The index was shy of 90 in early June; now it is trading well over 92.

This means the dollar is beginning the second half of the year on firm footing. Those readers who pay attention to charts might want to know that short-term technical indicators are stretched. In fact, after the release of the US employment report on July 2, USD gave up some of the recent gains, while broader equity indices hit new records. However, long-term charts suggest that the long dollar rally is not necessarily over.

We previously covered the Invesco DB US Dollar Index Bullish Fund (NYSE:UUP) that could appeal to readers who believe the greenback will likely appreciate in the coming weeks. Year-to-date, UUP is up about 2.3%. However, like the USDX, it is down more than 5% in the past 52 weeks.

Today, we introduce another similar currency ETF for USD bulls.

WisdomTree Bloomberg US Dollar Bullish Fund

Current Price: $25.50
52-Week Range: $24.88 - $27.50
Dividend Yield: 0.68%
Expense Ratio: 0.51% per year

Our fund for today is the WisdomTree Bloomberg US Dollar Bullish Fund (NYSE:USDU). It provides exposure to the US dollar against a basket of foreign currencies from both developed and emerging markets.

USDU Weekly
USDU Weekly

USDU aims to exceed the returns of the Bloomberg Dollar Total Return Index, which benefits as the US dollar appreciates. The fund started trading in December 2013, and net assets stand at $112 million.

The currency ETF saw a 52-week high about a year ago, on July 7, 2020. Over the past 12 months, it is down 7.3%. So far this year, it returned 1.64%. Readers who are bullish on the greenback could consider investing in USDU around these levels.

Investors following major currencies might also want to analyze several other currency ETFs, especially ahead of big data releases by the Fed or other central banks. These funds include:

Invesco CurrencyShares® Japanese Yen Trust (NYSE:FXY) — down 7.3% YTD (covered here);

Invesco CurrencyShares® Euro Currency Trust (NYSE:FXE) — down 3.4% YTD;

Invesco CurrencyShares® British Pound Sterling Trust (NYSE:FXB) — up 0.99% YTD (covered here);

Invesco CurrencyShares® Canadian Dollar Trust (NYSE:FXC) — up 3.1% YTD;

Invesco CurrencyShares® Australian Dollar Trust (NYSE:FXA) — down 2.6% YTD;

WisdomTree Emerging Currency Strategy Fund (NYSE:CEW) — down 1.5% YTD.

We’re bullish on the US dollar in the coming months. However, not everyone might share this sentiment.

Thus, those readers who believe the up move in the greenback will be short-lived and that the dollar index will likely slide again, could consider buying an inverse currency ETF, like the Invesco DB US Dollar Index Bearish Fund (NYSE:UDN), which we previously covered. So far in 2021, UDN is down 3%, but is up more than 4% on the year.

Bullish On The U.S. Dollar? Here's An ETF Worth Considering
 

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Bullish On The U.S. Dollar? Here's An ETF Worth Considering

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Comments (5)
Gary Ramberg
Gary Ramberg Jul 07, 2021 10:15AM ET
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You can listen to them yourself by going to YouTube and listen to their many YouTube interviews of go to Steven Van Metre (name of his channel) and listen and download the many charts.  He and Jeff Snider and his partner do regular YT posts. FWIW :)
Gary Ramberg
Gary Ramberg Jul 07, 2021 10:13AM ET
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According to these guys it is deflation and inflation Lacy Hunt, Steven Van Metre, David Rosenberg, Jeff Snider.  IMO Brilliant guys with a proven track record.  But ck them out for yourself to make your own educated decision of what is coming.  ps The Bond Market is the Real Tell so we will see :)
Scott Garber
Scott Garber Jul 07, 2021 10:09AM ET
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Who in their right mind is bullish on the dollar? They turned off the presses? Stopped adding debt? Insane.
David Dl
David Dl Jul 07, 2021 10:08AM ET
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Bullish in the dollar!! With the amount of printed circulating in the market! The dollar has no other choice than going down. The actual values can not be hold for long time.
Abdelraziq Abuaisha
Abdelraziq Abuaisha Jul 07, 2021 4:55AM ET
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No one is bullish on usd but the Fed, we are in inflation lady if you didn’t notice :)
 
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