An exchange traded fund tracking the dollar’s movements against a basket of currencies jumped on Wednesday as investors were back in “risk-off” mode after the previous session’s stock rally.
The greenback’s move higher also took the shine from ETFs that invest in gold and silver.
PowerShares DB US Dollar Bullish (NYSEArca: UUP) rose 1% in premarket trading Wednesday. Also before the bell, iShares Silver Trust (NYSEArca: SLV) slipped over 1% while SPDR Gold Shares (NYSEArca: GLD) was down fractionally.
The dollar has been in a relentless downtrend since mid-2010 but it has bounced somewhat recently and may be trying to form a bottom. Some of its gains have come at the expense of the euro, which has weakened as the focus has shifted to Greece’s problems.
If the dollar does find its footing and reverses course, the move would likely pressure stocks and commodities.
The dollar ETF is trying to push above its 50-day moving average. [Dollar, Euro ETFs Back for Test]
Additionally, the recent correlation between the dollar and U.S. stocks has raised eyebrows. [Why are Stock and Dollar ETFs Falling Together?]
PowerShares DB US Dollar Bullish
Full disclosure: Tom Lydon’s clients own GLD and SLV.