An exchange traded fund pegged to the dollar’s movements against a basket of currencies has been trading higher as Europe’s debt crisis moves back to the front burner.
ETF trading volumes and overall market volumes were subdued for most of the Labor Day shortened holiday week until Friday’s surge on sharp weakness in equities.
One particular ETF in the currency space that was active all week on heightened volume was PowerShares DB US Dollar Index Bullish (NYSEArca: UUP). It climbed above its 200-day moving average and on Friday closed at its highest level since March. [Dollar ETF Rallies at Euro’s Expense]
On the week, UUP rallied over 3% while CurrencyShares Euro Trust (NYSEArca: FXE) by comparison fell sharply on a large multiple of average daily trading volume, also revisiting extreme levels that were last touched in March of this year.
On the equity side, one sector ETF that saw an increase in activity on the asset inflows or creation side was Health Care Select Sector SPDR Fund (NYSEArca: XLV). [ETF Chart of the Day: Healthcare]
Largely due to several larger prints on Tuesday, the fund took in over $1 billion in new assets, and it appeared to us that an institutional manager was making a sizable long bet in healthcare, and perhaps taking a “defensive” equity posture as the sector itself is often thought of in that sense.
Amidst call buying earlier in the week in Financial Select Sector SPDR Fund (NYSEArca: XLF), it was no coincidence to see heavy buying in Direxion Financial Bull 3x Shares (NYSEArca: FAS) over the course of the week and over $200 million flowed into the fund as short term traders seem to be positioning for upside in the sector.
Market Vectors Gold Miners (NYSEArca: GDX) also took in over $500 million in assets on increased volume throughout the week, and the ETF traded at a multi-year high on Thursday before giving back some ground during Friday’s session. [Gold Miners ETF Pares Gains After Breakout]
A number of fixed income ETFs including iShares Barclays 7-10 Year Treasury (NYSEArca: IEF), iShares Barclays 1-3 Year Treasury (NYSEArca: SHY), Vanguard Total Market Bond (NYSEArca: BND) and iShares Barclays Aggregate Bond (NYSEArca: AGG) also saw inflows this week, which is consistent with investors flocking to bonds amidst another rocky week in the equity markets and heading into a weekend of uncertainty.
To this point, over $6 billion was yanked out of SPDR S&P 500 (NYSEArca: SPY) as well as it certainly felt on Friday that investors wanted to limit their exposure to equities going into the weekend with talk about a potential terror plot in the U.S. as well as rumors of a default in Greece.
Finally, we mentioned SPDR Barclays 1-3 Month T-Bill (NYSEArca: BIL) last week in terms of seeing massive inflows, and most of these assets fled the product this week, as it seems that the initial trade was simply a short term way to “park” free cash in a stable value 1-3 Month T-Bill linked product before redeploying elsewhere.
PowerShares DB US Dollar Index Bullish
Chart source: StockCharts.com.
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