“The outlook for the dollar is perhaps not as bright as many of the bulls think,” Andrew Wilkinson, chief market analyst at Interactive Brokers LLC, said in the article. “While I agree the Fed is likely to start the journey of normalizing interest rates, I think it’s going to take a lot longer than people ever expected.”

The depreciating U.S. dollar also highlights the risks of investing in the increasingly popular currency-hedged international ETFs as eight of the 15 worst performing ETFs on Wednesday were currency-hedged ETFs. Since these hedged strategies essentially take short positions in the respective local currencies, stronger foreign currencies or a weaker dollar would cause currency-hedged ETFs to underperform non-hedged global ETFs.

PowerShares DB U.S. Dollar Index Bullish Fund

For more information on the USD, visit our U.S. dollar category.

 

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