To The Moon

Compare to short trade, a moderate long trade with ETF is more sustainable.

Euro USD rate is about to under parity, which makes US dollar index surge to a 20-year high.

What is the US dollar index?

The US dollar index refers to the general international value of the US dollar, which is a measure of the value of the US dollar relative to a basket of foreign currencies. The US dollar index was established by the U.S. Federal Reserve in 1973 after the dissolution of the Bretton Woods Agreement. It is now maintained by ICE Data Indices, a subsdiary of $Intercontinental Exchange(ICE)$

The dollar index consists of Euro, British pound, Japanese yen, Canadian dollar, Swedish kronor and Swiss franc, which are important trading partners of the United States. Of course, it was incomplete that other major trading partners' currency not included, such as Chinese Yuan, Mexico Pesos, 

BTW, Singapore Dollars is much more steady towards USD with a buffer zone like HKD, it is more like fixed rate.

Dollar index reflects the macro-economy and is also related to the inflation of sovereign countries with a basket of foreign currencies.

If the value of the dollar index rises from 100 to 120, it means that the dollar has appreciated by 20% against the basket of currencies during this period. At present,The largest weight in the US dollar index is still the euro, reaching 57.6% In other words, the rise and fall of the euro plays a vital role in the strength of the US dollar.

Foreign exchange rate is not a unilateral correlation, but is closely related to the interest rate level, inflation level and import and export trade of the two countries. Of course, the liquidity of money is also crucial. The dollar index is equivalent to including the influence of all trading member countries.

Therefore, the current strength of the US dollar may be caused by the following factors:

1. The United States is raising interest rates, Feds rate level keeps rising makes US dollar attactive;
2. The surplus with trading countries has increased，even for Germany and Japan that usually in deficits;
3. US monetary policy tends to be tightened, Dollars are flowing back from all over the world.

At present, the expectation of raising interest rates in the United States is still strong, which means that the US dollar still has a strong upward momentum. That dollar has naturally become an important investment (capital preservation) variety.

Are there any US dollar index related products suitable for investors in the secondary market?

There are two dollar index ETFs that can be bought directly-UUP and USDU.

$Invesco DB US Dollar Index Bullish Fund(UUP)$It is a US dollar long ETF managed by Powershares, a subsidiary of $Invesco(IVZ)$ , an investment management company. The tracking error of the ETF of the past year is only 0.073. The positions of the ETF are US dollar index futures and short-term US bonds.

$WisdomTree Bloomberg U.S. Dollar BullishFund (USDU) $It is a trading open-end index fund established by WisdomTree, an asset management company of WisdomTree, which tracks Bloomberg Long-term Dollar Index. The return so far this year is 9%.

Bloomberg's dollar index is somewhat different from the traditional one. It removes the Swedish kronor, which is not in the major trading partner. and euro weights was reduced, but added Mexican peso, Australian dollar, Korean won, offshore Chinese RMB, Indian rupee and NT dollar. The positions of the fund are mainly weighted currency futures and short-term US dollar bonds.

Two ETFs have their own advantages,The UUP, which has a smaller basket of currencies, is naturally more volatile, and its returns this year have been higher due to the sharply drop in the euro; The USDU, on the contrast, is less volatile because of its diversification, but more "real" to dollar value.

In terms of liquidity, UUP is superior to USDU. For ETFs, liquidity is also a relatively important point.

Investing in dollars in dollars is equivalent to stepping up the purchase of dollar benefits in the interest rate raising cycle. Euro is about to fell below parity, and the US dollar will usher in a higher light moment.

When ETF invests in foreign exchange products, there will generally be no financial report of investing in ordinary companies and possible plunge.

Which would you choose to buy?