Don't Cast Dollar ETFs Aside Just Yet

Well, do not cast the PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) aside just yet if you are a firm believe that Goldman Sachs is accurate in its bullish calls on the greenback.

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, is off nearly 4% this month and obviously got no help from the Federal Reserve when the central bank declined to raise interest rates last week. Making life harder on the dollar and UUP is the fact that many traders are now betting that the Fed will only raise interest rates twice this year, down from expectations of four rate hikes coming into 2016.

Macquarie Bank Ltd. and Morgan Stanley, two of the world’s top 10 currency forecasters, are also warning of potential further risks in the U.S. dollar ahead. Goldman feels differently.

“Goldman Sachs Group Inc., one of the world’s top 10 foreign-exchange traders, is holding fast to its bullish-dollar stance, unmoved by the currency’s recent slide. Gains in the greenback against its higher-yielding peers on Monday showed at least some investors agree,” according to Bloomberg.

Bloomberg notes Goldman is of the mind that the Fed will raise rates three times this year.