forex

Why's the Dollar Rallying Again?
From Jack Crooks, Editor of World Currency Options and The Money Trader
What's Happening:
Everyone was just warming to the idea of a new dollar low - and now the buck started to rally. What's the driver? Maybe the decline in gold coupled with a small pullback in crude (see chart below)? But because they have been correlated, it is tough to say one or the other is the driver.
What We Say:
The new theme seems to be higher U.S. interest rates (the better than expected durable goods report Wednesday has helped validate this view). Also, the Fed may actually hike rates before the end of the year at least according to a lead story in the Financial Times yesterday. Whether it's true or not, the fact that it was in the paper represents a major shift in expectations. I'm not so sure about forecasting a Fed rate hike. But I've seen a decent move down in U.S. 10-year Treasury notes lately i.e. higher rates. And 10-year notes have been yet another price series moving in tandem with the US$ index. Below a chart of 10-year note futures vs. US$ Index Inverted (red line):
As You Can See, 10-Year Notes Have Been Stalking the U.S. Dollar Index

With 10-year notes tracking the U.S. dollar index, it's not certain what the Fed will decide to do next.
May 29, 2008
We’re sure you’ve heard of exchange traded funds (“ETFs”). Even though ETFs have only been around 15 years (starting with Standard & Poor’s SPDR back in 1993), it seems ETFs have gone mainstream and become the new “in” investment, much like mutual funds in the ‘90s.
But few mainstream investors take advantage of currency investing with ETFs – considering these special currency ETFs have only been available since 2006.
The official name for the currency ETFs is “Currency Trusts.” At last count, you can buy nine currency ETFs through any normal stock broker. You can buy all right on the New York Stock Exchange, except for the PowerShares DB G10 Currency Fund (DBV) which trades on the AMEX.
These ETFs mimic the spot price of the underlying currency they target – they hold actual currencies rather than futures contracts. A single share of each ETF represents 100 units of the base currency.
Here are some of the major benefits of this product:
Liquid at all timesTrade them as often as you'd like, at anytime during regular market hoursNo minimum investmentYou can short-sellYou can use margin and enhance your leveragePrice is tied closely to the underlying currencyHold them as long as you like – no time premium or expiration – so you can ride the long-term trend
Want to know which currency ETFs to buy, sell and trade? Every month, our currency analysts recommend timely ETF recommendations in our monthly members-only newsletter, as a long-term hedge against the buck. to get a sneak peek at what we see for the dollar’s future, and our monthly newsletter.