The U.S. Dollar Index is up about 6% and is putting pressure on oil prices, which opens the pathways for exchange traded fund (ETF) opportunities in a pair of Invesco funds.
The U.S. Federal Reserve is looking to start its stimulus tapering with possible rate hikes on the horizon in 2022, strengthening the dollar much to the chagrin of bullish oil traders.
“U.S. West Texas Intermediate crude oil futures are edging lower on Friday, putting the market in a position to finish the week with a loss,” an OilPrice.com article notes. “The usual supply and demand factors may have taken a back seat this week to the U.S. Dollar, which continued to firm on expectations that the U.S. Federal Reserve will speed up the pace of its interest rate hikes in an effort to tame inflation.”
“Crude oil bulls are also grappling with the possibility the Biden administration might release oil from the U.S. Strategic Petroleum Reserve to cool prices,” the article adds further. “Meanwhile, a new forecast from OPEC that showed world oil demand for the fourth quarter could also drop is raising additional concerns.”
Two ETFs to Play the Dollar’s Move Higher
The obvious play for greenback strength is to go to the Invesco DB US Dollar Bullish (UUP) to capture the dollar’s upward momentum. UUP tracks the price movement of the U.S. dollar against a basket of currencies, including the European Union’s euro, the Japanese yen, the British pound, the Canadian dollar, the Swedish krona, and the Swiss franc.
As the push towards less reliance on fossil fuels continues, the growing popularity of socially responsible investment strategies also continues to grow unabated. In response to the rising demand within the investment community, money managers have come out with countless new strategies to help investors target sustainable market sectors.
One such way to capitalize on the green movement towards renewable energy sources is the Invesco Global Clean Energy ETF (PBD). The fund has jumped 22% the last six months.
This ETF offers exposure to the global clean energy index, including both U.S. and international stocks in the underlying portfolio. PBD also diversifies across various types of clean energy — such as wind, solar, and hydro — making it an interesting option for those looking to bet on a clean energy boom but unwilling to make a concentrated bet on a specific sub-sector.
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