Dollar Index touched a 21-month high, and these three ETFs noticed
As markets sell off again, investors flee towards safety, sending the U.S. dollar index to a 21-month trading high. This move has supported a bullish trend for dollar index exchange traded funds.
As part of this, the Invesco DB US Dollar Index Bullish Fund (NYSEARCA:UUP) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (NYSEARCA:USDU) both gained ground. The UUP and USDU are each +0.4% in premarket trading.
The dollar index has topped 99.41 on Monday and has jumped 2.8% since Russia's invasion into Ukraine. The index is now +3.3% in 2022.
Aside from UUP and USDU, the Invesco DB US Dollar Index Bearish Fund (NYSEARCA:UDN) another fund that is affected by the moves in the dollar index. UDN is an inverse dollar fund that has been squeezed of late down 0.4% on the day and -2.8% since Russian troops invaded Ukraine.
While UDN is a bearish fund meant to move counter to changes in the dollar index, UUP and USDU work in a similar fashion as bull proxies. They offer exposure to a basket of currencies comparative to the performance of the U.S. dollar. As the dollar increases in value against other currencies, both UUP and USDU capitalize on the situation, moving up along with the U.S. currency. The funds would decline along with any drop in the dollar.
UUP is slightly more expensive than USDU, the fund has a 0.75% expense ratio and USDU has a cost of 0.50%. At the same time, both funds have different levels of liquidity as UUP has $901M AUM and USDU only has $109.9M under its belt.
Below is a U.S. dollar index chart as it touched a 21-month trading high.
While the dollar strengthens during this moment of uncertainty, the Russian Rubel has crashed. "In Russia, the stock exchange is still suspended, and the ruble is still weakening," UBS chief economist Paul Donovan said, as stock index futures point to a lower open.