To say the past few months have been tough on the euro would be quite an understatement. With multiple countries suffering from crippling debt crises, the currency has been sinking to lows not seen for quite some time. Now, the threat remains that if Greece cannot obtain yet another bailout, they may be forced to abandon the euro altogether. With all of the turmoil overseas and the trouble that the euro has faced, the U.S. dollar has come out on top, as the greenback has been preying on consistent losses from the competing currency.
The euro/dollar exchange rate is sitting at its lowest level in over a year, as the dollar seems to have found its footing over the past few months. With the Swiss franc peg and all of the turmoil surrounding the euro, it seems that investors have become more comfortable with what was once known as the safe haven currency. As the dollar continues its trek upwards, key economic data will be a big mover for the currency and this week will see no shortage of these reports.
Today will see jobless claims for the month of December. While this is not always a high profile event, it will likely take precedent in markets as there is not much else happening to gobble up headlines. The month of December saw initial jobless claims come in at about 381,000, but the most recent month is expected to report claims of 375,000; a nice drop. This dip may be attributable to increased hiring during the holiday rush, so a positive report may still have negative connotations attached.
In light of this data release and the recent performance of the dollar, today’s ETF to watch will be the DB USD Index Bullish (NYSEARCA:UUP). This fund tracks a rules-based index composed solely of long USDX futures contracts and is one of the most popular ETFs in the space. UUP has nearly $2 billion in assets and an average daily volume topping 5.2 million over the trailing three month period. If tomorrow’s jobless claims come in as expected, this fund could be in for a strong trading day. But be warned, a worse than expected report or speculation that good figures are boosted by temporary hiring may put a damper on the ETF for the Thursday’s session.
Disclosure: No positions at time of writing.
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