US Dollar ETFs Down On Fed (UUP, UDN, UUPT, UDNT)

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US Dollar ETFs Dropped Today On FOMC Statement And Bernanke Press Conference

US Dollar ETFs including the PowerShares DB US Dollar Index Bullish (NYSEARCA:UUP), the PowerShares DB 3x Long US Dollar Index Futures ETN (NYSEARCA:UUPT), and the PowerShares DB 3x Short US Dollar Index Futures ETN (NYSEARCA:UDNT) all dropped today on the Fed’s announcements.  The PowerShares DB US Dollar Index Bearish ETF (NYSEARCA:UDN) increased today because this ETF is designed to short US Dollars.

The US Dollar tends to rise with economic growth and tends to fall with increased inflation and lack of economic growth.  Although the US economy has been recovering ever so slightly, the US dollar likely fell today because the Fed outlined policies that encourage economic recovery, including near zero interest rates and a 2% inflation rate target.  These policies indicate that the US Economy is still on shaky ground, and that there will be more “free” dollars in the system, both of which would likely contribute to lower dollar figures.  More dollars typically means weaker dollars, which is likely why US Dollar ETFs such as NYSEARCA:UUP and NYSEARCA:UUPT decreased today as well.

US Dollar ETF Summary:

1. PowerShares DB US Dollar Index Bullish ETF (NYSEARCA:UUP): -0.10 (-0.45%)
2. PowerShares DB 3x Long US Dollar Index Futures ETN (NYSEARCA:UUPT): -0.36 (-1.71%)
3. PowerShares DB 3x Short US Dollar Index Futures ETN (NYSEARCA:UDNT) -0.18 (-1.02%)
4. PowerShares DB US Dollar Index Bearish ETF (NYSEARCA:UDN): +0.14 (0.51%)

Bottom Line: US Dollar ETFs likely declined today because the US dollar’s value declined in response to the Fed’s statements regarding near zero interest rates and inflation targets.  The strength of the dollar relies on a variety of factors, including inflation and economic growth.  Since the Fed has implemented policy to support US Economic growth, the US dollar is likely weak and will become weaker as inflation rises, thus resulting in a downwards trend for US Dollar ETFs.

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Disclaimer: Wall Street Sector Selector trades a wide variety of ETFs and positions can change at any time.