A currency exchange traded fund based on the U.S. dollar fell on Wednesday and was in danger of setting a new all-time low as most rivals advanced against the greenback.

PowerShares U.S. Dollar Index Bullish (NYSEArca: UUP) was down fractionally but pared its losses in late-morning trade. Producer prices rose more than expected in July, according to government figures released Wednesday. Excluding food and energy, core PPI rose 0.4%, the largest monthly rise since January, MarketWatch reported. Stocks advanced as the Dow gained nearly 100 points.

The ETF tracks the dollar’s movements against a weighed currency basket consisting of the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. [Swiss Franc ETF Higher; No Euro Peg from SNB]

The dollar ETF is down 7.5% year to date, according to investment researcher Morningstar. “For those who are bullish on the greenback, using a fund that bets against six currencies relative to the dollar is perhaps a better approach than taking on the idiosyncratic risk of just one currency,” the firm writes in a profile of the ETF.

Although the fund has been beaten up this year, recent data suggests traders are scaling back their bearish bets against the dollar and the ETF. [Traders Lighten Wagers Against Dollar]

PowerShares U.S. Dollar Index Bullish

Chart source: StockCharts.com.

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

The opinions and forecasts expressed herein are solely those of John Spence, 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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