Sector ETFs for a Weaker Dollar Outlook

After the U.S. dollar experienced one of its worst quarters in six years, the weaker greenback may help boost some areas of the market and sector-specific exchange traded funds.

“The biggest beneficiaries of all of this are going to be the industrials, who are very export sensitive,” Boris Schlossberg of BK Asset Management told CNBC.

The U.S. dollar index, which tracks the greenback’s movement against a basket of developed market currencies, has just experienced its worst quarter since 2010. As the USD depreciates, industrial products grow less expensive for foreign buyers, potentially bolstering overseas sales and profits.

Moreover, the Federal Reserve has pushed on rate hikes and downwardly revised interest rate hike expectations to two instead of the previously expected four hikes this year. Consequently, Schlossberg believes the dovish Fed will keep the dollar weak and support U.S. companies with a greater overseas footprint.

“I think any kind of dip here is a great opportunity for a buy, because it looks to me that the Fed is going to stay stationary for a while,” Schlossberg added. “That’s going to be very good news for the industrials going forward.”

For broad industrial exposure, investors can take a look ETF options like the Industrial Select Sector SPDR (NYSEArca: XLI), Vanguard Industrials ETF (NYSEArca: VIS) and Fidelity MSCI Industrials Index ETF (NYSEArca: FIDU).