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Which Currency ETF is the Best Hedge Against the Dollar?

Alligator Investor said:
“At this time, only FXE and DBV have enough trading volume to be really liquid. FXF could be traded with careful use of limit orders. The rest are languishing.”
Alligator Investor referred to volume from a liquidity risk concept, not that volume dictates higher returns.

Roger Nussbaum said:
“The argument seems to be based on volume, which of course looks back but the volume leader has not been the price leader -- not even close.”
The chart posted by Alligator Investor shows that it’s not even close. The author is talking about the volume/liquidity column.

The question I would raise; is the liquidity concept in ETF’s the same as stocks or is an ETF more similar to mutual funds in this respect?

David,
Didn’t see the original article, but if what you say is the case, then SA editors over edited this one. AI’s assumption that the Euro is more diversified than Cable, for instance, simply because the Euro represents several countries is questionable. All currencies are heavily influenced by the decisions of the corresponding central bank. The last time we checked, the ECB was calling the shots for the euro and not a diversified number of central banks.

Perhaps we should say that the Dollar is diversified because it represents 50 different countries! Heck, there is less economic correlation between Alaska and Nebraska than between Belgium and Italy. Don’t forget the satellite ‘dollarized’ countries like Panama, Ecuador etc.

Perhaps SA can post the original unedited AI article so that we can get a handle on this one. Maybe Roger read the original too!

Disclosure: Comment submitted by a CrossProfit analyst and may not reflect the opinion of CrossProfit.com.
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