Posted on 04/13/2025 10:25:08 AM PDT by Miami Rebel
ETFs tracking the U.S. dollar are gaining investor attention as the greenback faces increased pressure amid increasing global trade tensions and indications of a weakening U.S. economy. As sentiment turns bearish at a record pace, ETFs such as Invesco DB U.S. Dollar Index Bullish Fund UUP -0.90% are becoming crucial tools for investors trying to deal with the volatility.
The most popular dollar ETF is UUP, which provides exposure to the greenback versus a basket of currencies including the euro, yen, and pound. It’s constructed to profit when the dollar rises — but has underperformed in recent days as bearishness sets in, dipping 3% in the past month.
For those investors seeking to benefit from a falling dollar, the UDN provides inverse exposure to the same basket. UDN benefits when the dollar falls, and recent price action indicates that the tide may be shifting in its direction. The fund has gained 3.8% in the past month.
At the same time, the USDU offers a wider, more dynamic exposure, such as the Chinese yuan, Mexican peso, and South Korean won. This may interest investors looking for more diversified currency exposure as the global trade environment evolves. However, the fund has lost about 2% in the past four weeks as currencies across the world remained volatile.
These ETFs are being used more and more to take views on the dollar’s path — and for good reason.
The greenback is no longer on a high horse. A Bloomberg dollar gauge plunged to a new six-month low on Friday after China struck back in the trade war, hiking levies on all U.S. imports from 84% to 125% from April 12. That news alone would be sufficient to spook markets — but it was followed by figures that the U.S. wholesale prices declined by the largest amount since 2023, indicating that inflation is still muted at the very moment that tariffs are poised to push prices higher.
The spillover was prompt. Options investors went short on the dollar for the first time in half a decade, while a Z-score measure — tracking how far the current positioning departs from historic standards — marked the steepest shift in sentiment ever recorded, according to Bloomberg. One-month risk reversals inverted in favor of downside protection in the dollar, confirming the narrative that investors are dumping ingrained perceptions about the greenback as a refuge asset.
Markets across the board are getting hit. The S&P 500 dropped 3.5% on Thursday, long-term Treasuries declined, and traders are now pricing in almost 90 basis points of Fed rate reductions for the year. Although the S&P 500 closed 1.8% higher on Friday, the heat is building in the market with pressure on the Federal Reserve to respond to tariffs compressing growth and inflation cooling. Policymakers may have no other choice but to loosen.
The dollar’s largest decline in over two years highlights just how rapidly investor attitude can change — and for those who want to hedge currency exposure or bet on additional swings, dollar ETFs are becoming more and more the instrument of choice.
What is ETF? I’ve always thought electronic funds transfer.
I was wondering what CHSdjbrhtbdud ufhjddjdbbdkalpwbdb over at Benzinga was thinking about the dollar.
Another foreigner who is an expert on how America should be run.
https://en.wikipedia.org/wiki/Exchange-traded_fund
“An exchange-traded fund (ETF) is a type of investment fund that is also an exchange-traded product, i.e., it is traded on stock exchanges.[1][2][3] ETFs own financial assets such as stocks, bonds, currencies, debts, futures contracts, and/or commodities such as gold bars. Many ETFs provide some level of diversification compared to owning an individual stock.”
>>What is ETF? I’ve always thought electronic funds transfer.
Exchange Traded Fund. Basically an attempt to financially model something that doesn’t trade on a exchange (e.g. inflation rate, strength of the dollar) by a basket of things that do.
World’s reserve currency on the brink? ... everyone dumping the worthless USD and fleeing to the russian ruble and chinese yuan? .. Daum! ... time to air out my bunker, seal myself in, and wait for a Democrat President to straighten out Donald Trump’s mess ...
I don’t know if the writer is a foreigner, but her nationality has little to do with the topic. Currencies aren’t patriotic or nationalistic. And I don’t think she was trying to pass as an expert. She’s first merely describing how financial markets have behaved in the recent past and then bringing to light ETFs that allow investors to play those trends. She even mentions UUP, a dollar bull play which do well if the dollar rebounds.
The dollar is a trading vehicle, just like any publicly trade market, whether hog bellies, AT&T shares, or West Texas Intermediate crude.
Alternately, a time to add to gold holdings. I’m very long GLD.
The peso is not doing so well.
The USD isn’t going away, however the strength of the USD is declining, in a long term decline….USDindex was 120 years ago, now down to 90’s / 100….even Venezuela’s Bolivar is still in use by the people…..wake me up when it reaches 80 or so.
ALL the world’s currencies are crashing in purchasing power, the USD is still the prettiest pig in the pig pen.
Note: all bets off if the enemies can pull off Operation Sandman.
For those requiring spoon feeding:
https://worldinsight.info/operation-sandman-unveiling-a-global-challenge-to-the-us-dollar/
What is Operation Sandman?
Operation Sandman is reportedly an international collaboration involving over 100 nations. These countries aim to sell off their holdings of US Treasury bonds simultaneously. The goal is to destabilize the US fiat currency by forcing the repatriation of US dollars. Such an action could undermine the dollar’s global reserve currency status, potentially leading to a financial crisis within the United States.
Note: all bets off if the enemies can pull off Operation Sandman.
—
That may explain the recent sell-off in the U.S. bond market. But the plan is self-defeating because a weaker dollar makes our exports more competitive.
Exit light
Enter night
Take my hand
We’re off to Never—, Neverland.
Yeah but I like to hear it from FReepers.
“Yeah but I like to hear it from FReepers.”
Nothing like e being too lazy.
🖕
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