While the euro, yen and Canadian dollar combine for nearly 61% of USDU’s weight, the ETF also offers investors exposure to weakness in the Mexican peso (almost 10% of the fund) and the Brazilian real, among other emerging currencies. Alone, USDU’s dollar/peso and dollar/real positions are advantageous because, earlier today, the peso hit a record low against the greenback while the Brazilian currency labors at 12-year lows against the dollar. [Bad News for Brazil ETFs]
USDU also offers leverage to the weakening Australian dollar (6% of the ETF). The Aussie has been decimated by a series of Reserve Bank of Australia interest rate cuts and slumping commodities prices, among other factors. The latter makes short Aussie a trade on emerging markets weakness, of which there is plenty at the moment as highlighted by the CurrencyShares Australian Dollar Trust (NYSEArca: FXA) hitting its lowest levels since 2009 today.
For its part, USDU is not far off its all-time high set in March and the ETF has jumped almost 15% since debuting in December 2013.
WisdomTree Bloomberg U.S. Dollar Bullish Fund
