The European Central Bank meets Thursday, but that is just one of roughly a dozen global central bank meetings over the next 10 days and those meetings appear to be the impetus behind increased bullish options bets on the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP).
“On Monday, calls, usually used to place bullish bets on the shares of the ETF, were busy with volume of 33,000 contracts. The calls outnumbered puts by a ratio of about 10 to 1, according to Trade Alert data,” reports Saqib Iqbal Ahmed for Reuters.
Yesterday, UUP gained 0.2% to close at $25.25, the ETF’s highest closing print in nearly five years. That extended the U.S. Dollar Index tracking ETF’s year-to-date gain to 5.3%. UUP tracks the dollar movement against a basket of developed market currencines, including the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. [Dollar ETF Winning Currency Wars]
Last week, PowerShares, the fourth-largest U.S. ETF issuer, temporarily halted creations of new shares in UPP and its bearish equivalent, the PowerShares DB US Dollar Index Bearish Fund (NYSEArca: UDN), but the creation limit was lifted in about a day, enabling traders to resume using UUP as a vehicle for making bets against the euro.
The CurrencyShares Euro Currency Trust (NYSEArca: FXE) is down 7.7% this year, but because currencies can stay weak or strong in the case of the dollar for extended periods, some market observers believe the dollar’s strength is still in the early innings and that the euro is destined for parity – or lower – against the greenback. [Currency Hedged ETF Lessons]
Despite the brief creation suspension, UUP has added $10 million in new assets over the past week, a total surpassed by just nine other PowerShares ETFs. Investors have added $332.5 million to UUP over the past year, according to issuer data. Only six PowerShares ETFs have seen larger inflows over that period.