October 21, 2008 at 12:00 pm by Tom Lydon
The bullish dollar exchange traded fund (ETF) has been on a tear in recent months and is one of the few standouts in a sea of red.
The PowerShares DB U.S. Dollar Index Bullish (UUP) is up 14.7% for the last three months, and is up 8.1% year-to-date.
The good times might continue, as the dollar is now at an 18-month high on strong demand from financial institutions seeking a safe haven, reports Lucia Mutikani for Reuters.
Analysts also say the dollar is fueled by signs of momenutum building for a second economic stimulus package. There’s also speculation that banks will need more dollars to settle credit derivatives tied to the Lehman Brothers bankruptcy.
The Japanese yen also continues to benefit from investors who are liquidating their highly leveraged positions. The currency is closely correlated with risk-aversion in investors, making it the ultimate safe-haven currency, report William L. Watts and Nick Godt for MarketWatch.
CurrencyShares Japanese Yen (FXY) is up 9.4% year-to-date.
Read the disclosure, as Tom Lydon is a board member of Rydex Funds.
Tags: Currency ETFs, FXY, Japanese Yen, U.S. Dollar, UUP
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