3 ETFs For Surprise Drop In The Dollar

March 28, 2017

WisdomTree Emerging Currency Fund (CEW)

The WisdomTree Emerging Currency Fund (CEW) provides exposure to an equal-weighted basket of 15 emerging market currencies and their money market rates. If the dollar decline goes on, emerging market currencies are likely to be some of the biggest beneficiaries.

CEW's basket includes the aforementioned Mexican peso, the Brazilian real, the Indian rupee and the Chinese yuan, among others.

CEW invests in forward contracts and doesn't pay regular dividends, but it has a chunky implied yield of 4.8%. Year-to-date, the fund is up 5.2% after returning 4.1% last year.

YTD Return For CEW, US Dollar Index

 

SPDR Gold Trust (GLD)

Widely regarded as a dollar hedge, gold has delivered on its promise this year. The SPDR Gold Trust (GLD) is up 9% year-to-date, and stands at its highest levels of the year just as the dollar drops to its lowest levels of the year.

That's no coincidence. The 120-day correlation between gold prices and the U.S. Dollar Index is about -0.62, the tightest level since 2012 (a correlation of +1 means the two always move in the same direction, while a correlation of -1 means the two always move in opposite directions).

If this correlation holds, GLD will continue to be one of the best anti-dollar ETFs available for investors.

YTD Return For GLD, US Dollar Index

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