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Trading Opportunities Abound in the Currency ETF Space

Tuesday, October 11, 2016 10:53
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US dollarDon’t look now, but the U.S. Dollar is on an absolute tear lately, today included, with the largest linked ETP, the PowerShares DB US Dollar Index Bullish (NYSE:UUP), moving parabolically.

Year-to-date, UUP (expense ratio: 0.80%) has actually lost assets via redemption, with about $300 million leaving the fund. But given the recent move through July highs, it would not at all be surprising to see increased interest in this fund in terms of new buyers and/or those eager to hedge the dollar move against other global currencies.

Another fund to keep an eye on as the dollar moves higher is EUO (ProShares UltraShort Euro, Expense Ratio 0.93%, $373 million in AUM). EUO has seen mild outflows year-to-date as well, with about $115 million vacating the fund via redemption flows. In spite of year-to-date outflows knocking UUP back below the $1 billion mark in terms of assets under management, it still stands tall as the largest Currency ETF in the U.S. listed marketplace.

In fact, EUO is nearly four times the size of the next largest unlevered fund in the space which is (ironically) FXB (Guggenheim CurrencyShares British Pound Sterling, Expense Ratio 0.40%, $243 million in AUM). USDU (WisdomTree Bloomberg U.S. Dollar Bullish, Expense Ratio 0.50%) is the third largest unlevered Currency based fund with about $214 million in assets under management, and this ETF has had flattish flows year-to-date ($-14 million). It would not be surprising to see an increased appetite for this fund along with UUP if the recent move continues through this quarter and into year-end.

UDN (PowerShares DB U.S. Dollar Index Bearish, Expense Ratio 0.80%, $39.2 million in AUM) also populates this space and is designed for dollar bears that may think that the recent run has gone too far, too fast. There are no “Bull levered” products in the dollar space at the moment (although there has been in the past prior to product de-listing), and that’s unfortunate, given the timeliness and potential usage such a product would offer in the present environment.


UUP shares rose $0.18 (+0.72%) to $25.24 in Tuesday afternoon trading. Year-to-date, UUP has fallen 1.62%.

Disclaimer: The content of this article is excerpted from a daily newsletter from Street One Financial. While ETF Daily News may edit the contents and add a relevant title to the piece, the author, Paul Weisbruch, does not endorse or recommend any issuer or security mentioned herein.

About the Author: Paul Weisbruch
paul-weisbruchPaul Weisbruch is the VP of ETF/Options Sales and Trading at Street One Financial. Prior to joining the team at Street One, Paul served as the Director of RIA and Institutional ETF Sales at RevenueShares ETFs from December 2007 until November of 2009. Before RevenueShares, Paul was employed by Susquehanna International Group from 2000 until 2007 serving in roles including OTC/NYSE Institutional Block Trading, Nasdaq/OTC Market Making, ETF/Derivatives Intelligence and Strategy, Algorithmic Trading, as well as acting as the PHLX Floor Specialist in the ETFs, SPY and DIA.

Paul has been actively involved in the ETF space from both a product and trading standpoint since 2000. Additionally, Paul has well forged relationships with national RIAs, institutional pension fund managers and consultants, mutual fund and hedge fund managers, and also the ETF media. Co-authoring the “S1F ETF Daily” since 2009, the daily piece has become a must for many portfolio managers in the ETF space, with segments regularly appearing in the likes of Barron’s, WSJ, and for instance.

He holds his Series 4 (Registered Options Principal), 6, 7, 55 (Equity Trader), 63, and 65 licenses. He graduated from the University of Pittsburgh (B.S. – Economics), graduating magna cum laude, and has an MBA from Villanova University.

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