A New Way to Trade Currencies
February 22nd, 2007 by Justin
For those too confused to trade FX futures, too timid to deposit funds with a spot FX broker, and too lazy to switch their regular stock brokerage accounts over to something else, currency trading is still an option.
Deutsche Bank, in conjunction with a company called Powershares, has launched two exchange-traded funds (ETFs) that allow investors to take positions on the US Dollar Index. The index is composed of a basket of currencies that are thought to be anti- or counter-dollar, so that the index itself is supposed to reflect a balanced view of the US Dollar according to how much trade the US does with the country or region behind each currency. The Euro is of course the largest component in the USDX (Dollar Index contract), because the euro-zone is United States’ largest trading partner.
In any case, these funds allow people to take a position based on their market view–pro-dollar or anti-dollar–without leaving the comfort of the E*Trade, Scottrade, BrownCo, Schwab, and Ameritrade accounts. The tickers are UUP for the dollar bullish ETF, and UDN for the dollar bearish ETF, and both are traded on the AMEX (American Stock Exchange).
AMEX’s own press release has more (below), but for now my view is that the convenience of these instruments is their primary benefit. Costs, leverage, etc. are no better here than in spot forex and futures, by any means. But if laziness and fear would have otherwise prevented you from staking your claim in the foreign exchange world, then by all means, have at it.
http://sev.prnewswire.com/banking-financial-services/20070220/NYTU13820022007-1.html
