ETF Chart of the Day: Dollar Darlings

July 30th at 12:00pm by Paul Weisbruch, Street One Financial

Last week we mentioned the rapidly falling Euro in terms of related ETFs, notably FXE (CurrencyShares Euro, Expense Ratio 0.40%) and the $456 million EUO (ProShares UltraShort Euro, Expense Ratio 0.95%), and today the currency is receiving no respite from this drop.

Likewise, U.S. Dollar linked ETPs are furiously rallying again, and the largest product in the category UUP (PowerShares U.S. Dollar Index Bullish, Expense Ratio 0.80%) is gapping higher on huge trading volume.

As of 10:27 AM EST the ETF had already traded north of 2.4 million shares versus its average daily volume of about 693,000 shares, and we will watch fund flows closely in recent days to see if this ETF continues to
reel in assets (approximately $734 million in AUM currently, and presently it is the largest “Currency” related ETP listed in the U.S. marketplace).

UUP finds itself testing early 2014 highs and it will be interesting to see if near term Fed comments touch on what looks like a swift and sudden dislocation between the Dollar and the Euro that has occurred literally throughout the month of July.

We are actually surprised that UUP is not larger than a $734 million fund, but sense that some of that has to do with the sometimes narrow, range-bound price action that has occurred at times, but moves like the Dollar has had recently will not go unnoticed by institutional ETF players for long.

USDU (WisdomTree Bloomberg U.S. Dollar Bullish Fund, Expense Ratio 0.50%) is the second largest ETF in the category following its December 2013 debut, but the fund has a substantially lower asset base than the larger and more well-known UUP with about $55 million in AUM.

At some point, perhaps traders will embrace UUPT (PowerShares DB 3X Long U.S. Dollar Index Futures ETN, Expense Ratio 0.95%) as a directional trading vehicle if not a hedge, as well as its sister ETN UDNT (PowerShares DB 3X Short U.S. Dollar Index Futures ETN, Expense Ratio 0.95%) as these ETNs only have $3.5 million and $1.6 million in AUM respectively, which is almost an absurdly low amount for what seem like trade-able products that would be of some utility to aggressive Currency/Macro focused managers and hedgers alike.

And, for the “Doubting Thomas” crowd concerning the recent Dollar rally, UDN (PowerShares DB U.S. Dollar Index Bearish, Expense Ratio 0.80%) sees some action periodically, as the fund has about $53 million in AUM.

PowerShares DB US Dollar Index Bullish Fund

uup

For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at pweisbruch@streetonefinancial.com.

Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.

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