The U.S. dollar-relate exchange traded funds surged Friday, with the greenback touching a four-year high, after the solid September jobs report fueled bets on a quickening U.S. recovery.
The dollar index, a gauge of the U.S. dollar’s value against six major currencies, touched a high of 86.56 Friday, its strongest level since June 2010, increased 8% so far this year and posted weekly gains for a record 12 consecutive weeks, Reuters reports.
The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP), which 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, rose 1.2% Friday. UUP is up 5.9% year-to-date. [ETFs to Capitalize on Further U.S. Dollar Strength]
Despite the strengthening U.S. dollar, UUP has experienced outflows over the past few months. The ETF saw $161.7 million in outflows over the past 30-days and shrunk by $53.3 million over the past 90-days, according to PowerShares data.
Additionally, the actively managed WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEArca: USDU) tracks the USD against a broader basket of developed and emerging market currencies, including the euro, yen, Canadian dollar, Mexican peso, pound sterling, Australian dollar, Swiss franc, South Korean won, Chinese yuan and Brazilian real. USDU increased 1.4% Friday is up 3.3% year-to-date.
Developed currencies led the declines on Friday. The CurrencyShares Swiss Franc Trust (NYSEArca: FXF), CurrencyShares British Pound Sterling Trust (NYSEArca: FXB), CurrencyShares Euro Currency Trust (NYSEArca: FXE) and CurrencyShares Japanese Yen Trust (NYSEArca: FXY) all decreased over 1%.
The U.S. dollar is appreciating after the Labor Department revealed non-farm payrolls rose 248,000 last month and jobless rates dipped to 5.9%, the lowest since July 2008.
“Overall it’s a positive report for the dollar and points to continued growth and recovery in the U.S.,” Sireen Haraji, currency strategist, at Mizuho Corporate Bank, said in the Reuters article.
The greenback has been appreciating for much of the year as traders anticipate the Federal Reserve to eventually tighten its monetary policy.
“As the Fed steps away from ultra-loose policies, the dollar should gain against the chief beneficiaries of those policies, namely emerging market and commodity currencies,” currency strategists led by Kit Juckes at Societe Generale said, CNBC reports.
However, while most strategists remain bullish on the dollar, some warn against over-exuberance, arguing that a strong dollar can hurt exports, multinational companies, pressure consumer prices and potentially delay Fed tightening.
PowerShares DB U.S. Dollar Index Bullish Fund
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