Currency ETFs Look to Fed for Clues | ETF Trends

Exchange traded funds pegged to the U.S. dollar and other currencies are taking their cues from central banks. In particular, dollar ETFs are sensitive to the prospect of further easing from the Federal Reserve.

PowerShares DB US Dollar Index Bullish (NYSEArca: UUP) is down slightly year to date. The ETF follows the movement of the greenback versus a basket of currencies.

Federal Reserve Chairman Ben Bernanke has expressed his doubts about the sustainability in the U.S. recovery, hinting at more stimulus measures. Consequently, foreign currency-related exchange traded funds have been appreciating as currency traders anticipate the future debasement in the U.S. dollar.

“While the labor market may lead to a self-sustaining recovery, we have not seen that in a persuasive way yet,” Bernanke said to the National Association for Business Economics, writes Gary Gordon for ETF Expert.