The U.S. dollar struggled at the start of this year as market anticipated a delay in rate hike from the Federal Reserve. The U.S. Fed had hiked benchmark interest rates for the first time in more than a decade in December 2015. However, the central bank appeared dovish at the start of this year as global markets saw extreme volatility.
In the last two weeks though, there is growing speculation that the Fed would hike interest rates at its meeting in June or July. The minutes of the Fed’s most recent FOMC certainly suggested this. Last week, the Fed Chair Janet Yellen also hinted at a summer rate hike. Given the Fed’s hawkish stance, the U.S. dollar has been strengthening. Canadian investors should consider gaining exposure to the greenback through the Horizons U.S. Dollar Currency (ETF) (TSX: DLR).
The ETF has gained more than 1% in the last three trading sessions. In the last one month, the ETF has gained more than 4.50%. Year-to-date though, the ETF is still down more than 5%, which indicates that there is still room for upside.
DLR is currently trading around 10% below its 52-week high.
