The PowerShares DB US Dollar Bullish Fund (Symbol: UUP) is based on the Deutsche Bank Long US Dollar Index (USDX®) Futures Index™ (DB Long USD Futures Index). The Index, which is managed by DB Commodity Services LLC, is a rules-based index composed solely of long USDX® futures contracts. The USDX® futures contract is designed to replicate the performance of being long the US Dollar against the following currencies: Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. You cannot invest directly in an index. Ordinary brokerage commissions apply.
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The amount of dollar cash in circulation has jumped 42% in the past five years, with the proportion held abroad climbing from 56% to nearly 66%. The eurozone crisis has boosted demand since 2010, a trend that could strengthen following the raid on Cypriot bank deposits.
Dollar (UUP) bullishness of 72% of respondents reached the highest level in the history of BAML's fund manager survey. At the same time, bearishness on U.S. stocks (SPY) reversed, with a net 5% calling the U.S. the market it most wishes to overweight vs. 19% underweight in January. (PR)
The new hedge fund hotel is U.S. dollars (UUP), writes Josh Brown, noting BAML data showing large specs are net long $2.6B in the dollar index. It's near the level at which it can be called too crowded of a trade, says BAML.
The U.S. energy boom will prove bullish for the dollar, helping make U.S. assets more attractive and increasing GDP growth, BAML's David Woo says: “Going forward, it will be the euro zone rather than the U.S. that will have to bear the brunt of the cost of the growing Chinese and Indian consumers and their appetite for energy."
SPY adds to gains following the better-than-expected NFP print, now +0.5%. The dollar pops, now +1.6% vs. the yen, +0.7% vs. the euro. UUP +0.6%. The long bond tumbles, falling a full point since the report's release. TLT -1.3%, TBT +2.9%. Homebuilders ETF: XHB +0.7%.
A few too many on one side of the boat? The world's most popular short, the yen is strengthening in chunks now, with the dollar -2.5% and buying ¥91.10. More popular than long dollar/yen has been long euro/yen and that's getting pounded even harder. The twin trade to short yen has been long Japan stocks, particularly in the form of the hedged equity ETF (DXJ). It's off 3.3%.
Warming up to the idea FOMC hawkishness may be getting ahead of itself, precious metals reverse course. Gold's now up $26 from the overnight low, GLD +1%. SLV +0.7%. The dollar, however, continues to strengthen, UUP +0.3%.
Jim Rogers used to call G-7/G-20 meetings the equivalent of professional wrestling, but Bridgwater sugar-coats it a little bit, calling discussions there about currency wars "more of a semantic dance than a substantive matter." Change in monetary policy is the same as change in currency policy, says Bridgwater, and countries (Japan) will manage monetary policy for their own domestic purposes. (h/t fed_speak).
"Consistent with the G-7 statement," the U.S. is using domestic policy tools to advance domestic objectives, says Bernanke, speaking at the G-20. A strengthening U.S. economy will be good for the world economy. The dollar (UUP) continues moving higher. (G-20 earlier)
Guggenheim's CurrencyShares Singapore Dollar Trust (FXSG) is the 1st ETF tracking the Singapore dollar. The ETF holds foreign currency deposits rather than derivatives, rising when the U.S. dollar weakens relative to the Singapore dollar. FXSG comes with an expense ratio of 0.40% - standard for CurrencyShares ETFs, but cheaper than other currency ETFs UUP (0.50%), CEW (0.55%), INR (0.55%), BZF (0.45%), CNY (0.55%), ERO (0.40%) and ICI (0.65%). (pdf)
About a year after shaking up the ETF world with the launch of the Total Return ETF (BOND), Pimco is set to debut this week the Foreign Currency Strategy fund (FORX). For those interested in benefiting from dollar devaluation, the fund will invest in the currencies and fixed-income paper of non-U.S. countries.
Dealing a blow to precious metals, the Chicago Fed's Charles Evans - as dovish as they come - tells CNBC QE could end before unemployment sinks to 7%. As for the 6.5% unemployment rate that might trigger rate hikes, Evans doesn't see that happening until mid-2015. GLD -0.7%, SLV -1.5% premarket. The dollar gets a bid as well, UUP +0.4% premarket.
More on jobless claims: At 335K, it's the lowest read since January 2008. The 4-week moving average declines 6.75K to 359.2K. A Marketwatch report say seasonal quirks could be behind the big decline, without giving any detail. The news combines with the big housing starts print to send S&P futures +0.6%, 10-year Treasury yields to 1.87%, gold -0.6%, and the dollar higher across the board.
ISI Group isn't buying it, telling clients to fade any market moves predicated on a more hawkish Fed, even if we get a strong employment report on Friday. The hawkish remarks are from the same meeting where it was decided to add $45B/month in QE!
More on FOMC Minutes: Treasurys tumble (TLT -1.1%) and the dollar strengthens (UUP +0.7%) after the surprisingly hawkish report in which it's made clear it's not just Jeff Lacker who has an issue with QE. Gold sells off as well, GLD -1.1%. Stocks give up just a little ground.