Currency Index is an index that describes the value of a currency against a basket of major Forex currencies

 

US Dollar Index (USD INDEX -USDX)

The US Dollar Index or USDX is a currency index that describes the value of the US dollar against a basket of major Forex currencies.

 

The US Dollar Index

USDX can measure the overall strength of the US Dollar against the strength of other major Forex Currencies. In addition, Forex traders can assess technical analysis on the historic chart of the USDX Index by drawing support and resistance, trendlines etc.

  

Six (6) Forex Currencies and their Weight

The USDX uses a weighted mean system for measuring the USD value against a basket of six major Forex:

Table: Six Forex Currencies and their Weight on USDX

FOREX CURRENCY

SYMBOL

WEIGHT (%)

European Euro

EUR

57.60%

Japanese Yen

JPY

13.60%

British Pound Sterling

GBP

11.90%

Canadian Dollar

CAD

9.10%

Swedish Krona

SEK

4.20%

Swiss Franc

CHF

3.60%

Total

100%

Note: This basket of currencies does not include some major trading partners of the US such is China, Brazil, and Korea.

Chart: The Current US Dollar Index

The USDX started in 1973 with a base of 100. Every value of the index since 1973 is relative to this 100 base. That means that if the USDX index is found at 200 then it has performed 100% against the basket of the six (6) major Forex currencies

Source: FinViz Currency Indices

 

The USDX Index History

The Index was created by the US Federal Reserve, following the ending of the 1944 Bretton Woods agreement. The USDX started in 1973 with a base of 100. Every value of the index since 1973 is relative to this 100 base. That means that if the USDX index is found at 200 then it has performed 100% against the basket of the six (6) major Forex currencies. The weighing of the USDX Index has been altered once, during 1999. This modification happened as the European Currency (Euro) was launched in January 1999, note that the net representation of European currencies remained unchanged at 57.6%. Before 1999, the original USDX included 10 currencies. That means that Euro replaced 5 European Currencies: the West-German Mark, the French Franc, the Italian Lira, the Belgium Franc and the Dutch Guilder.

■ German mark (DEM), weight 20.8%

■ French franc (FRF), weight 13.1%

■ Italian lira (ITL), weight 9.0%

■ Dutch guilder (NLG), weight 8.3%

■ Belgium franc (BEF), weight 6.4%

 

Top EA Builder App -Free for Creating MT4/MT5 Indicators..

 

USDX Updates

The index is updated on a 24/5 basis and that means whenever the US Dollar capital markets are active:

■ Starts at Sunday evening {New York time}

■ Ends in late Friday afternoon {New York time}

US Dollar Index at FxStreet

 

Trading the USDX

The USDX index can be traded as a futures and options contract but also via ETFs and mutual funds. The USDX futures contract can be found in the ICE (InterContinental Exchange) which absorbed the New York Board Of Trade during 2007. The symbol of the USD Index futures is DX.

The ICE Web-Site

 

The ICE USD Index and ICE Futures Contracts

ICE USDX Futures Calculation

The ICE USDX Index is officially calculated by Reuters in real time (15 seconds change). The price of USDX

used for calculation is based on the mid-point of the book

bid/offer in the component currencies. The Bloomberg code of the USDX is DXY and called also as “Dixie”.

Dollar Index Spot at Bloomberg

 

USDX Futures Contract Specifications

The size of the USDX Index futures contract is $1,000 x the value of the index. The smallest price increment for trading the USDX futures contract is .005 or else $5. The USDX contract is settled quarterly every year. Note that the USDX futures contract is a physically delivered contract and that means that if the USDX futures contract is held until the final settlement, the holder of the Long Position must deliver the basket of the six currencies in the Index. From the other hand, the holder of the Short Position must pay in US Dollars and receive the basket of the six currencies. The USDX futures contract receives liquidity directly from the global OTC Forex market.

 

MORE ON CARRYTRADER

■ COMPARE PROVIDERS

Forex Brokers for Day Traders

Brokers for Carry Traders

Automated Forex Systems

Rebate Plans      
■ CURRENCY PAIRS EURUSD GBPUSD USDJPY EURGBP AUDUSD NZDUSD USDCAD

 

US Dollar Index (USD INDEX -USDX)

George Protonotarios for CarryTrader.com (c)

Foreign Exchange

The Foreign Exchange Market is the largest Financial Market in the world with daily volumes of more than 4 trillion USD. When trading Forex you need a reliable and high-regulated Forex broker and a trading strategy that works:

(i) Introduction to Forex Trading

(ii) Forex Brokers for Traders

(iii) Major Currency Pairs

(iv) Automated Forex Systems

Global Markets

Trading the Financial Markets requires a perfect understanding of how demand and supply shift from time to time. Equities tend to follow bullish cycles lasting 7-9 years, and after, bearish cycles lasting 3-4 years. Energies tend to follow annual time patterns while Precious Metals tend to follow longer time cycles:

(i) Gold Trading

(ii) Crude Oil Trading

(iii) Rebate Plans

Learning

If you are a trader, learning is a non-stop process. CarryTrader offers a wide variety of educational resources including trade tools, techniques, and strategies:

(i) Currency Indices

(ii) Famous Investors

(iii) Technical Analysis

(iv) Brokers for Carry Traders

Go to top