Over the past 90 days, the average loss for the CurrencyShares Euro Currency Trust (NYSEArca: FXE), CurrencyShares Japanese Yen Trust (NYSEArca: FXY), CurrencyShares Australian Dollar Trust (NYSEArca: FXA) and the CurrencyShares Canadian Dollar Trust (NYSEArca: FXC) is 6.2%.
That is good news for the U.S. dollar. Although the greenback has pulled back in recent sessions, there is no denying the U.S. currency has been on a torrid pace over the past several months. Some traders and investors are even betting on additional upside for King Dollar.
“The value of the dollar’s net long position rose to $40.91 billion in the week ended Oct. 7, from $37.36 billion the previous week. This was the eighth straight week that net longs in the dollar have totaled at least $30 billion,” reports Reuters, citing Commodities Futures Trading Commission data.
It is not just the forex market that is seeing a mad dash to bullish dollar positions. Last week, the PowerShares DB US Dollar Index Bullish Fund (NYSEArca: UUP) hauled in $154.8 million in new assets, according to PowerShares data. That is more than quadruple the inflows seen to the PowerShares FTSE RAFI US 1000 Portfolio (NYSEArca: PRF), the second-best PowerShares ETF for inflows last week.
Inflows to UUP have brought the ETF’s assets under management total to $882 million and coincided with professional traders increasing net short exposure to the euro, yen and Australian and Canadian dollars. [Dollar ETF Posts Another Weekly Gain]
While not quite on the same breathtaking pace of ETFs holding longer-dated U.S. Treasuries, UUP has sharply outperformed U.S. equities this year, gaining 6.2% while the S&P 500 is up 4.6%. More gains could be on the way for the world’s reserve currency.
Inflows to UUP and dollar futures are intensifying as markets price in seemingly unending easing in Japan, the European Central Bank initiating its own easing a battle down under to further weaken the Aussie and the realization the Bank of England may not hike rates as soon as previously expected. All that just as the Federal Reserve is winding down quantitative easing. [ETFs for the Dollar’s Rise]
UUP tracks the price movement of the U.S. dollar against a basket of currencies, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Sweden lowered interest rates earlier this year and the CurrencyShares Swiss Franc Trust (NYSEArca: FXF) is off 7.1% over the past 90 days.
PowerShares DB US Dollar Index Bullish Fund
