Currency ETFs: Dollar Weakens on QE3, Moody’s Warning

September 14th at 10:57am by Tom Lydon

An ETF tracking the U.S. Dollar Index is down about 7% from its July high on further quantitative easing from the Federal Reserve and Moody’s warning it may downgrade the U.S. credit rating.

The U.S. Dollar Index is down to its lowest level in four months. The Fed announcing QE this week and the possible downgrade from Moody’s has bearish implications for the greenback and has set the tone for PowerShares DB US Dollar Index Bullish ETF (NYSEArca: UUPgoing forward.

The currency ETF is off 2% this week. UUP follows the movement of the dollar against a basket of currencies.

“A fiscal cliff and another downgrade [are] not dollar-positive,” Kathleen Brooks, research director at Forex.com, said in a report. [Currency ETFs Caught in EuroZone Concerns]

Moody’s Investor Service announced that the United States is at risk for losing its triple-A rating by 2013, reports Deborah Levine for MarketWatch.

“The warning shot fired by Moody’s Investor Services has … dampened the outlook for the USD as the government remains reluctant to address the ‘fiscal cliff,’” said David Song, currency analyst at DailyFX.com. [ETF Spotlight: Currencies

PowerShares DB US Dollar Index Bullish ETF 

 

Tisha Guerrero contributed to this article. 

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. 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.

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