The U.S. dollar-related exchange traded fund slipped slightly against a basket of major market currencies on Friday after the USD jumped to a 14-year high in response to the Federal Reserve’s monetary policy decision.
The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) fell 0.4% Friday after reaching an all-time high in the prior session. The currency ETF rose 2.9% year-to-date.
UUP 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.
The US Dollar Index (DXY), which follows the greenback against a baske tof six major currencies, was last at 103.14, just shy of its 14-year high of 103.56, on Thursday, reports Sam Forgione for Reuters.
The Dollar Index was hovering around 102.82 Friday.
The Index experienced its best daily percentage gain of 1.2% in six months Thursday after the U.S. central bank raised rates for first time in a year and signaled that it would likely hike rates three more times next year.
The euro currency also nearly reached a 14-year low against the dollar, trading at around $1.0364 Thursday, with some traders expecting the EUR to reach parity to the USD within the next 12 months. The dollar hit a roughly 10-1/2 month high of 118.66 yen.
Moreover, expectations that the U.S. President-elect Donald Trump would help U.S. economic growth with stimulus measures also supported the rise in the dollar.
Nevertheless, the slight pullback in the U.S. dollar on Friday suggested that traders were taking profits ahead of the weekend and expectations of a squeeze on dollar liquidity toward the end of the year.
“We’re probably starting to thin out for the holidays as well, so there are some people taking some profits,” Win Thin, global head of emerging market currency strategy at Brown Brothers Harriman, told Reuters.
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