US Dollar ETFs including the PowerShares DB US Dollar Index Bullish Fund ETF (NYSEARCA:UUP) and the PowerShares DB 3x Long US Dollar Index Futures ETN (NYSEARCA:UUPT), rose today on a weaker Euro Dollar and continued Eurozone fears.
The Euro dollar dropped 0.8% today to close at the $1.30 “psychologically important” mark, as European leaders voted in a new rescue fund today while Greek debt talks have stalled yet again. Meanwhile, it is estimated that Portugal has a 70% chance of default in the next five years as its bonds have been relegated to “junk status” by major ratings agencies. In response to all of Europe’s not so good news, the CurrencyShares Euro Trust ETF (NYSEARCA:FXE) dropped nearly 1% today and will likely drop lower so long as European fire continues to smolder.
US Dollars and US Dollar ETFs likely rose today in response to the continued European crisis. Although the US Dollar is typically weaker than the Euro dollar, Europe’s sovereign debt crisis has possibly sparked investors to buy US dollars they currently seem safer than Euro dollars. Despite the Fed’s statements last week and the continuing decline of the US dollar in past weeks and years, the US Dollar still remains the world’s reserve currency and is still safer than Euro dollars so long as Europe continues to simmer.
US Dollar ETF Summary:
- PowerShares DB US Dollar Index Bullish Fund ETF (NYSEARCA:UUP): +0.08 (0.36%)
- PowerShares DB 3x Long US Dollar Index Futures ETN (NYSEARCA:UUPT): +0.27 (1.32%)
- PowerShares DB US Dollar Index Bearish Fund ETF (NYSEARCA:UDN): -0.11 (-0.40%)
- PowerShares DB 3x Short US Dollar Index Futures ETN (NYSEARCA:UDNT): -0.26 (-1.44%)
- CurrencyShares Euro Trust ETF (NYSEARCA:FXE): -0.92 (-0.70%)
Bottom Line: US Dollar ETFs likely rose today over fears that the Euro dollar is under jeopardy again as Greece debt talks have stalled, Portugal is at further risk of default, and the European Union voted for a larger rescue fund. Typically US Dollars are weaker than Euro dollars especially after last week’s Federal Reserve action on interest rates. Despite US Dollar weakness, investors are likely using the US dollar as the “next step” safe haven currency in case events in Europe crush the Euro.