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Zecco.com » General Investing » ETF & Mutual Fund Investing » Time to go Bullish on US Dollar?
Last post 06-03-2008, 12:19 AM by Scott ¥$£. 4 replies.
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  •  05-12-2008, 9:14 PM 28972

    Time to go Bullish on US Dollar?

    Reply Quote
    With the recent indication by the Fed that they intend to stop interest rate cuts, an increasing (though not nearly univeral) recognition that the US market has already hit bottom, increased exports from the US, the fact that higher commodity prices are causing inflation in many countries around the world, such as Japan and China, and the stance from the EU that they want to help prop up the dollar; Does anyone think that it might be the time to go bullish on US dollars?

    I was just looking at the etf, PowerShares DB US Dollar Index Bullish (UUP), which has long positions in the US Dollar against the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc.  It has experienced a nice little rebound since late March, so I just wanted to throw this out there and get some other opinions.

    http://finance.yahoo.com/

    -mgrass

  •  05-12-2008, 9:33 PM 28973 in reply to 28972

    Re: Time to go Bullish on US Dollar?

    Reply Quote
    Just because the Fed stopped cutting rates, doesn't mean the dollar will appreciate.  Leaving rates at a low (but constant) value is enough to devalue the currency. 

    I'd recommend DBV for a currency play, or as an investment in general.  It invests in 3 G10 currencies with highest interest rates, and shorts the 3 with lowest.  It's only existed for a few years, but the index it tracks has existed since '93, and outperformed the S&P over that time. 

    Since it's denominated in dollars it can't actually short the dollar, but if it could, right now it would:
    http://www.invescopowershares.com/

  •  05-12-2008, 10:40 PM 28977 in reply to 28973

    Re: Time to go Bullish on US Dollar?

    Reply Quote
    Thats certainly an interesting etf I hadn't heard of before.  But from that link you provided, it looks like the fund is shorting the dollar right now.  I don't know what you mean that it can't short the dollar since it is denominated in dollars.  The funds seems to be based on futures contracts, so wouldn't it not matter what currencey the fund is denominated in?   The premise behind the fund seems very well structured though, definetely something I'll look into further.

    I agree that the fact the Fed has stopped cutting rates isn't a reason by itself to assume the dollar will begine to appreciate, and the fact that the European Central Bank is adamant about not cutting its rates certainly doesn't boster this assumption.  But it is an indication that USD depreciation will at the least slow.  But there are other factors I mentioned, such as (hopefully) increases in US growth, inflationary pressures in Asia, and a willingness by the Europeans to help stengthen the dollar along with other geo-political areas such as the middle east whose oil is tied to the USD, and rate cuts by the Bank of England.   While I do not think that the USD will start to appreciate overnight, I do think factors are coming into play that will slow its depreciation and can reverse the USD's trend in the near (or far) future. 

    -mgrass



     

  •  05-17-2008, 2:36 AM 29267 in reply to 28977

    Re: Time to go Bullish on US Dollar?

    Reply Quote
    Personally, I'd hold off.  Early next year is when I'm thinking.  I'd expect a few bumps, and overall a slight deterioration in the USD between now and November.

  •  06-03-2008, 12:19 AM 30361 in reply to 29267

    Re: Time to go Bullish on US Dollar?

    Reply Quote
    When everyone is telling you to not buy something, I jump in head first.

    After all, stay ahead of the curve is where the money is.

    I am bullish on US dollar in about 3 months.

    Good Luck,
    Scott
    S&P 500 Trend
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