Why Engage in Forex Currency Trading and Hedging?
Many Americans expend a considerable portion of their net income on energy and materials. Since energy sources like oil and metals like gold and silver are traded on global exchanges as dollar-denominated assets, as the US dollar weakens against foreign currencies, while a particular commodity may remain roughly stable in terms of say, the Euro, it may become increasingly expensive in terms of the US dollar. Consumers and investors looking to hedge this exposure on a grand scale can simply buy a currency ETF that provides returns based on the rise and fall of foreign currencies versus the US dollar. All of the ETFs below are in terms of US dollars, so if you were to purchase FXA for example, you’d be banking on an increase in the strength of Australia’s Dollar versus the US Dollar. (If you were doing this over the prior 6 month period, you would have been right – FXA is up over 20% as the dollar has weakened considerably against virtually all major currencies). Some doomsayers are call
