Dollar Up, Dollar Down: There’s An ETF for That
July 1st, 2008 at 3:00pm by Tom Lydon
Morgan Stanley has made a bold prediction that, if true, could help the bullish dollar exchange traded fund (ETF).
The strategist said that we’re in the waning period of the dollar’s decline against most of the major currencies around the world, CNBC reports. But temper that excitement, because the financial sector is still taking a beating, and the Federal Reserve could be forced to make more interest rate cuts.
Morgan Stanley also believes that there might be some gains in the offing for Asian currencies against the dollar, as well.
Another investment bank begs to differ, though: Switzerland-based BIS says the dollar could plunge, and a sudden "rush for the exits" can’t be ruled out, reports Kim-Mai Cutler for Bloomberg. BIS agrees that the Japanese yen may strengthen this year, and is forecast to rise to 100 per dollar and 148 per euro.
The Dollar Index, which measures the currency against six other major ones, has fallen 5.7% this year.
Wherever you land on this debate, there are a number of ways to get exposure to global currencies, including:
- iPath EUR/USD Exch Rate ETN (ERO), up 9.2% year-to-date
- PowerShares DB U.S. Dollar Bearish Fund (UDN), up 6.8% year-to-date
- PowerShares DB US Dollar Index Bullish (UUP), down 5.2% year-to-date
- Market Vectors Double Short Euro (DRR), launched May 22
- CurrencyShares Japanese Yen Trust (FXY), up 4.8% year-to-date
Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.