U.S. Dollar Index

The U.S. Dollar Index (USDX, DXY, DX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies,[1] often referred to as a basket of U.S. trade partners' currencies.[2] The Index goes up when the U.S. dollar gains "strength" (value) when compared to other currencies.[3]

US Dollar Index and major financial events.

The index is designed, maintained, and published by ICE (Intercontinental Exchange, Inc.), with the name "U.S. Dollar Index" a registered trademark.[4][5]

It is a weighted geometric mean of the dollar's value relative to following select currencies:

History

USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the U.S. Dollar Index was 100.000. It has since traded as high as 164.7200 in February 1985, and as low as 70.698 on March 16, 2008.

The make up of the "basket" has been altered only once, when several European currencies were subsumed by the euro at the start of 1999. Some commentators have said that the make up of the "basket" is overdue for revision as China, Mexico, South Korea and Brazil are major trading partners presently which are not part of the index whereas Sweden and Switzerland are continuing as part of the index.

Year (last business day)DXY CloseFactors Driving Dollar's Value[6]
1967121.79Gold standard kept dollar at $35/oz.
1968121.96
1969121.74Dollar hit 123.82 on 9/30.
1970120.64Recession.
1971111.21Wage-price controls.
1972110.14Stagflation.
1973102.39Gold standard ended. Index created in March.
197497.29Watergate.
1975103.51Recession ended.
1976104.56Fed lowered rate.
197796.44
197886.50Fed raised rate to 20 percent to stop inflation.
197985.82
198090.39Recession.
1981104.69Reagan tax cut.
1982117.91Recession ended.
1983131.79Tax hike. Increased defense.
1984151.47
1985123.55Record of 163.83 on March 5.
1986104.24Tax cut.
198785.66Black Monday.
198892.29Fed raised rates.
198993.93S&L Crisis.
199083.89Recession.
199184.69Recession.
199293.87NAFTA approved.
199397.63Balanced Budget Act.
199488.69
199584.83Fed raised rate.
199687.86Welfare reform.
199799.57LTCM crisis.
199893.95Glass-Steagall repealed.
1999101.42Y2K scare.
2000109.13Tech bubble burst.
2001117.21Dollar rose to 118.54 on 12/24 after 9/11 attacks.
2002102.26Euro launched as a hard currency at $.90.
200387.38Iraq War. JGTRRA.
200481.00
200590.96War on Terror doubled debt. It weakened the dollar.
200683.43
200776.70Euro rose to $1.47.
200882.15Record low of 71.30 on 3/17.
200977.92ECB lowered rates.
201078.96QE2.
201180.21Operation Twist. Debt crisis.
2012 - 201379.77QE3 and QE4. Fiscal cliff.
201380.04Taper tantrum. Government shutdown. Debt crisis.
201490.28Ukraine crisis. Greek debt crisis.
201598.69Fed raised rates.
2016102.21
201792.12EU strengthened.
201896.17Dow falls.
2020102.57COVID-19 outbreak. Massive quarantines slowdown the global economy.

Quotes

ICE provides live feeds for Dow Futures that appear on Bloomberg.com,[7] Money.CNN.com,[8] DollarIndex.org.[9] USDX is updated whenever U.S. Dollar markets are open, which is from Sunday evening New York City local time (early Monday morning Asia time) for 24 hours a day to late Friday afternoon New York City local time.

Calculation

The U.S. Dollar Index is calculated with this formula: USDX = 50.14348112 × EURUSD-0.576 × USDJPY0.136 × GBPUSD-0.119 × USDCAD0.091 × USDSEK0.042 × USDCHF0.036 [10]

Trading

The Index can be traded as a futures contract on the ICE exchange. It is also available indirectly in exchange-traded funds (ETFs), options, CFDs and mutual funds.

See also

References
  1. "U.S. Dollar Index - USDX". Investopedia. Retrieved March 23, 2013.
  2. "US Dollar Index Hits 12-Year High As ECB Unveils €1 Trillion Stimulus". FXTimes. Retrieved March 23, 2015.
  3. "US Dollar Index". FXStreet. Retrieved March 23, 2013.
  4. "U.S. Dollar Futures". Retrieved July 22, 2017. The U.S. Dollar Index, together with all rights, title and interest in and related to the U.S. Dollar Index, including all content included therein (including, without limitation, it’s formulation, components, values, weightings and methods of calculation), and all related intellectual property and property rights, is the exclusive property of ICE Futures U.S., Inc.
  5. United States Patent and Trademark Office. "Trademark Search, Serial Number 74350026". Retrieved July 22, 2017.
  6. US Dollar Index®, What It Is, and Its History
  7. Bloomberg https://www.bloomberg.com
  8. CNN Money http://money.cnn.com
  9. Dollar Index https://dollarindex.org
  10. "U.S. Dollar Index® Contracts" (PDF). 2018. p. 2. Retrieved October 15, 2018.
  11. "Wall Street Journal Dollar Index". Dow Jones & Co. Retrieved July 24, 2013.
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