6 Currency ETFs to Diversify from the Dollar

October 18th at 1:00pm by Tom Lydon

Trading lower on news of another potential cash infusion by the Central Bank into the markets, the U.S. dollar is depreciating against a basket of currencies. The various currency exchange traded funds (ETFs) are an easy way for investors to access the swings in the currency market.

Recent news came out about a growing consensus among Federal Reserve policy makers to implement new policies of asset and Treasury bond purchases next month as a way to prod the economy into activity, according to The Economic Times. However, analysts warn that the Central Bank won’t be quick act since the economy is still churning out growth.

Between a peak on June 7 through Oct. 12, the U.S. Dollar Index dropped 12.8%, writes Ron Rowland for Money and Markets. Though this might hurt our egos, a cheaper dollar is actually a boon for our domestic industries since it makes exports cheaper to foreign buyers. [U.S. Dollar ETFs Play Both Sides of the News.]

Currently, huge deficit spending by our administration and “quantitative easing” by the Feds are bringing down the dollar. Other governments and their respective Central Banks are also artificially lowering their currencies to protect their own economies, but the greenback is falling faster than other currencies. [Currency ETFs Get Ready to Rumble.]

There are more than 30 currency ETFs, including leveraged and inverse plays. Consider what’s trending up – you can sort these ETFs in the ETF Analyzer to find the best anti-dollar play for you.

  • ProShares Ultra Euro (NYSEArca: ULE)
  • WisdomTree Dreyfus Euro (NYSEArca: EU)
  • CurrencyShares Swiss Franc (NYSEArca: FXF)
  • CurrencyShares Swedish Krona (NYSEArca: FXS)
  • CurrencyShares Australian Dollar (NYSEArca: FXA)
  • PowerShares DB U.S. Dollar Bear (NYSEArca: UDN)

For more information on the greenback, visit our U.S. dollar category.

Read the disclaimer; Tom Lydon is a board member of Rydex|SGI.

Max Chen contributed to this article.

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.