Other major currencies are also seen as vulnerable to near-term weakness against the dollar. The CurrencyShares Australian Dollar Trust (NYSEArca: FXA), which tracks the Aussie against the U.S. dollar, is off nearly 6% over the past month. FXA could be increasingly vulnerable as the monetary policies of the Fed and the Reserve Bank of Australia continue diverging. RBA recently cut Australia’s benchmark interest rates to a record low.
The CurrencyShares Japanese Yen Trust (NYSEArca: FXY), which until recently had been one of the best-performing developed market currency ETFs, could see declines if investors opt for riskier assets.
More international investors have piled in to the relatively attractive yields in U.S. government debt as foreign central bank policies have pushed international government yields to near zero or negative in some cases like Japan.
For more information on Currency ETFs, visit our Currency-Hedged category.
PowerShares DB U.S. Dollar Index Bullish Fund