The rebounding U.S. dollar and concerns about China, the second largest world economy, are dragging down commodities prices and related exchange traded funds.
Since the Monday close, the PowerShares DB Commodity Index Tracking Fund (NYSEArca: DBC) dipped 2.2%, iPath Dow Jones-UBS Commodity Index Total Return ETN (NYSEArca: DJP) fell 2.3% and iShares GSCI Commodity-Indexed Trust (NYSEArca: GSG) declined 1.8%.
The recent ell-off corresponded with jump in the U.S. dollar, with 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, gaining 2.3% so far this week.
Investors who want to capitalize on a continued fall in the commodities market can take a look at the ProShares UltraShort Bloomberg Commodity (NYSEArca: CMD), which takes the daily -2x or -200% performance of the Bloomberg Commodity Index. However, potential traders should use limit orders to better control trades as the ETF shows relatively low activity.
The S&P GSCI Index, which tracks 24 commodities, experienced its largest one-day drop in over a month and end its lowest since April 28 on Tuesday, reports Ira Iosebashvili for the Wall Street Journal.
The commodities space had been experiencing a decent rebound, led by crude oil prices, as a faltering USD pushed short-term investors to acquire raw resources on the cheap.