UDN: US rate cuts make UDN rise inevitable

The US rate cuts were fairly drastic, and will cause the market to be flooded with easy to borrow US dollars. This has led to dollar inflation abroad, hence these prices changes in currency ETFs just since Jan 1: As of Monday, 2.04.08, currency ETF changes year to date. Sym Chg%08 FXA aus +3.43% FXB lb -1.02% FXC can - .25% FXE eur +1.33% FXF frc +4.07% FXM mex + .84% FXS swe + .13% FXY yen +4.48% UDN $bear +1.74% DVC g10 - .87% UUP $bull - .89% Had you had all 10 non-dollar funds, +1.4% vs -.9% for Dollar Bull fund, a difference of +2.3%, or Dollar Bear fund, +1.74%, a difference of +2.64% vs the Dollar Bull fund. So far that's about a 1% move per month in the underlying funds, which probably will no be sustained, but it should continue moving in this direction until the US Fed Reserve changes its policy and starts moving rate upward again - that could be 2 yrs at least. The extra cash you have should be moved into one these other funds as the dollar erodes. Some, like FXB (British lb), FXA (Aussie dollar) or FXE (Euros) pay over 3% yields.