Dollar rally lifts U.S.-dollar ETFs

The U.S. dollar strengthened in the week through May 15 as traders pulled back expectations for Federal Reserve easing after hotter April inflation data and rising oil prices. Dollar-linked exchange-traded funds moved higher alongside the currency, including Invesco’s DB US Dollar Index Bullish Fund, which is designed to track the greenback against a basket of major currencies. The move followed a run-up in Treasury yields and a repricing in rate expectations after fresh data and energy-market pressure unsettled investors. Benzinga reported the ETF gains on May 15, citing demand for products tied to the dollar. ### Which dollar ETFs were in focus? Invesco’s DB US Dollar Index Bullish Fund, traded under the ticker UUP, was one of the products highlighted as the dollar advanced. Invesco says the fund seeks to track the Deutsche Bank Long USD Currency Portfolio Index and is designed to reflect the value of the U.S. dollar against six major currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Morningstar showed UUP at a net asset value of 27.75 on May 16, with a 1-day return of 0.54% and total assets of about $355.6 million. Invesco lists the fund’s net expense ratio at 0.70% and its year-to-date return at NAV at 1.07% as of April 30. ### What changed in the inflation data? The U.S. Bureau of Labor Statistics said on May 12 that the consumer price index rose 0.6% in April on a seasonally adjusted basis after a 0.9% increase in March. (invesco.com) The 12-month increase accelerated to 3.8% from 3.3% in March, while core CPI, which excludes food and energy, rose 0.4% on the month and 2.8% on the year. (morningstar.com) The same BLS release said the energy index rose 3.8% in April and accounted for more than 40% of the monthly increase in headline CPI. Gasoline prices rose 5.4% in the month and were up 28.4% from a year earlier. ### Why did that matter for the dollar? Reuters reported on May 15 that longer-dated Treasury yields climbed to their highest levels since May 2025 as higher oil prices added to inflation concerns already reinforced by this week’s data. (bls.gov) The 2-year Treasury yield, which often tracks interest-rate expectations, rose to 4.071% at its session high, while the 10-year yield touched 4.558%. Trading Economics showed the U.S. Dollar Index at 99.2693 on May 15, up 0.46% on the day and up 1.07% over the past month. That provided the market backdrop for gains in funds linked to the dollar. ### How did rate-cut expectations shift? CME FedWatch says its probabilities are derived from 30-day Fed Funds futures prices and are used to track the likelihood of changes in the federal target rate at upcoming meetings. (money.usnews.com) As of May 16, the tool showed the next Federal Open Market Committee meeting in 34 days, placing it on June 17, 2026. (tradingeconomics.com) Reuters reported earlier in the week that Goldman Sachs and Bank of America had pushed back their forecasts for the next Fed rate cut, with Bank of America economist Aditya Bhave writing that “the data simply don’t warrant cuts this year.” Goldman shifted its call for the next cut to December 2026 from September, according to that report. (cmegroup.com) ### What should investors watch next? June 17, 2026, is the next scheduled Fed decision date shown on CME FedWatch. Any further moves in inflation, Treasury yields and oil prices before that meeting are likely to remain central inputs for dollar trading and for funds such as UUP that are built to track the currency’s moves. (cmegroup.com) (thestar.com.my)