The U.S. dollar has been in a free fall, but the greenback-related ETF regained its footing after President Donald Trump confirmed his strong dollar outlook.
The PowerShares DB U.S. Dollar Index Bullish Fund (NYSEArca: UUP) rose 0.1% Thursday. However, it still declined 4.1% over the past month and decreased 10.1% over the past year. UUP tracks movements of the U.S. dollar against a basket of currencies including euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc.
Meanwhile, the PowerShares DB US Dollar Index Bearish (NYSEArca: UDN), an inverse play on the greenback, fell 0.1%. UDN, though, still strengthened 4.2% over the past month and increased 10.7% over the past year.
The USD appreciated against its foreign peers late Thursday after Trump declared that the dollar will continue to strengthen and that remarks made by his Treasury secretory on a weaker U.S. currency the day prior were taken out of context, Bloomberg reports.
“The dollar is going to get stronger and stronger, and ultimately I want to see a strong dollar,” Trump said during an interview with CNBC from the World Economic Forum in Davos, Switzerland.
Trump projected that the dollar would gather momentum as the U.S. economy expands. Following the president’s remarks, the dollar pared its decline that was triggered the day before when Treasury Secretary Steven Mnuchin said a weak dollar benefited the U.S. economy, which many observers took as a indirect support for a weak dollar outlook.
Mnuchin’s comments on a weak dollar on a CNBC-moderated panel at Davos was interpretted as a stark contrast to America’s long-standing policy for a strong dollar.
“Whatever the intent was, the fact they did it right after these trade actions on washing machines and solar panels suggest it’s something more thought out. You saw Mnuchin was trying to walk it back, and [Commerce Secretary Wilbur] Ross tried to walk it back,” Win Thin, senior currency strategist at Brown Brothers Harriman, told CNBC. “The dollar was being sold even before these comments. There’s other stuff going on. Our view is the rest of the world is getting better quickly, so the U.S. does not stand out so much.”
For more information on the forex markets, visit our currency ETFs category.