As the dollar drops, buy these ETFs: Traders

The U.S. dollar index has just concluded its worst quarter since 2010, as the currency weakened against major currencies around the world. And according to two traders, the drop presents a serious opportunity to make money in a few choice ETFs.

"The biggest beneficiaries of all of this are going to be the industrials, who are very export sensitive," Boris Schlossberg of BK Asset Management predicted Thursday on CNBC's "Trading Nation."

Schlossberg points to the Vanguard Industrial Index, the VIS, as the place to invest. The ETF has rallied more than 16 percent since the February low. And to Schlossberg's point, as the dollar loses value, U.S. industrial products effectively become less expensive for foreign buyers, potentially boosting sales and/or profits.

Further, the macro and currency strategist predicts that a lack of future rate hikes from the Federal Reserve will keep the dollar weak, and industrial stocks strong.

"I think any kind of dip here is a great opportunity for a buy, because it looks to me that the Fed is going to stay stationary for a while," Schlossberg said. "That's going to be very good news for the industrials going forward."

But not everyone thinks staying in the U.S. is best.

"I'm going abroad here. I think the U.S. dollar is going to help European stocks," said Gina Sanchez, the CEO of Chantico Global, said Thursday on CNBC's "Trading Nation."

A bit counterintuitively, Sanchez argues a weaker dollar is beneficial for U.S. earnings and U.S. stocks but that a greater positive impact will be seen in European equities, since European stocks often respond dramatically to what transpires in U.S. markets.

Sanchez consequently recommends buying the iShares S&P Europe 350 ETF (IEV). And to her point, the IEV has a beta of 1.23, according to Google Finance — implying that for every jump or dip in the S&P 500, the IEV tends to rise or fall even further.

Even if a stronger euro (which should attend a weaker dollar) drags a bit on any European gains, then, a stronger dollar "is still going to be very beneficial [since] Europe is a high-beta play on the U.S.," Sanchez said.


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Trader Bios


Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Sara Eisen

Sara Eisen joined CNBC in December 2013 as a correspondent, focusing on the global consumer. She is co-anchor of the 10AM ET hour of CNBC's "Squawk on the Street" (M-F, 9AM-11AM ET), broadcast from Post 9 at the New York Stock Exchange.

In March 2018, Eisen was named co-anchor of CNBC's "Power Lunch" (M-F, 1PM-3PM ET), which broadcasts from CNBC Global Headquarters in Englewood Cliffs, N.J.

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