The Canadian dollar has risen appreciably against the greenback in recent months, due in part to overall stability in the Canadian economy relative to other G7 nations, as well as an overall weakening of the U.S. Dollar due to a number of key catalysts.
For investors believing that many of these geopolitical and economic catalysts are far from dissipating, continuing with an investment strategy that benefits from a weakening U.S. dollar is the way to go. For investors who are uncertain, moving forward with a hedged strategy in which some of the currency risk of a portfolio is eliminated by combining different securities, is the alternative.For those investors who believe the party may be over with the Canadian dollar and it is time to reverse course, a few ETFs provide the ability for these investors to jump on the U.S. dollar gravy train. In this article, I’ll highlight one I think provides investors with the best upside, should a stronger U.S. dollar take hold before the end of the year, as predicted by a number of economists.
The PowerShares US Dollar Index Bullish (NYSE:UUP) is one ETF which aims to invest in securities which reflect a long U.S. dollar position relative to a basket of global securities, isolating the U.S. dollar, allowing investors to essentially replicate a long USD position with a basket of securities, providing the upside of the underlying equities as well as the currency exposure as well.Invest wisely, my friends.