Forex Trading

DXY Chart USD Currency Index Quote

The U.S. Dollar Index futures contract derives its liquidity directly from the spot currency market, estimated to have a turnover of over $2 trillion daily. The U.S. dollar index allows traders to monitor the value of the USD compared to a basket of select currencies in a single transaction. It also allows them to hedge their bets against any risks with respect to the dollar.

  1. If the index is rising, it means that the dollar is strengthening against the basket – and vice-versa.
  2. Today, the company is among the largest exchange groups in the world.
  3. Because not every country is the same size, it’s only fair that each is given appropriate weights when calculating the U.S. dollar index.
  4. Now that we know what the basket of currencies is composed of, let’s get back to that “geometric weighted average” part.
  5. The USDX can be used as a proxy for the health of the U.S. economy and traders can use it to speculate on the dollar’s change in value or as a hedge against currency exposure elsewhere.

As a result, expect to see big moves in the fund in response to euro movements. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. For instance, the Invesco DB U.S. Dollar Index Bullish Fund (UUP) is an ETF that tracks the changes in value of the US dollar via USDX future contracts.

Because not every country is the same size, it’s only fair that each is given appropriate weights when calculating the U.S. dollar index. The ICE Exchange symbol for the value of the underlying Dollar Index (sometimes called the cash or spot index) is also DX (without a month or year code), although different data providers may use different symbols. Dollar Index in 1985, ICE compiles, maintains, determines, and weights the components of the U.S. It’s very similar to how the stock indices work in that it provides a general indication of the value of a basket of securities.

Trade-weighted USD Index

Options on the futures contracts began trading on September 3, 1986. Dollar Index futures and options on futures are available exclusively on the ICE electronic trading platform. The U.S. Dollar Index consists of a geometric weighted average of a basket of foreign currencies against the dollar. The USDX is based on a basket of six currencies with different weightings (see above). The index calculation is simply the weighted average of the U.S. dollar exchange rates against these currencies, normalized by an indexing factor (which is ~50.1435).

Today, the company is among the largest exchange groups in the world. This makes the USDX a pretty good tool for measuring the U.S. dollar’s global strength. It’s obvious that 24 countries make up a small portion of the world but many other currencies follow the U.S. Similarly, if the index is currently 80, falling 20 from its initial value, that implies that it has depreciated 20%. The appreciation and depreciation results are a factor of the time period in question.

The U.S. Dollar Index has risen and fallen sharply throughout its history. Over the last several years, the U.S. dollar index has been relatively rangebound between 90 and 110. The euro is, by far, how to use moving average crossovers to enter trades the largest component of the index, making up 57.6% of the basket. The weights of the rest of the currencies in the index are JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%).

In the coming years, it is likely currencies will be replaced as the index strives to represent major U.S. trading partners. It is likely in the future that currencies such as the Chinese yuan (CNY) and Mexican peso (MXN) will supplant other currencies in the index due to China and Mexico being major trading partners with the U.S. Now that we know what the basket of currencies is composed of, let’s get back to that “geometric weighted average” part. The dollar index tracks the relative value of the U.S. dollar against a basket of important world currencies. If the index is rising, it means that the dollar is strengthening against the basket – and vice-versa. The USDX uses a fixed weighting scheme based on exchange rates in 1973 that heavily weights the euro.

What is DXY?

ICE provides live feeds for Dow Futures that appear on Bloomberg.com and CNN Money. 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. The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. The Index was adjusted once when the euro was introduced as the common currency for the European Union (EU) bloc of countries. As a currency trader, you should be familiar with ALL three of them.

We and our partners process data to provide:

The U.S. Dollar Index (USDX) is a relative measure of the U.S. dollars (USD) strength against a basket of six influential currencies, including the Euro, Pound, Yen, Canadian Dollar, Swedish Korner, and Swiss Franc. The index was created in 1973, but remains useful to this day. The USDX can be used as a proxy for the health of the U.S. economy and traders can use it to speculate on the dollar’s change in value or as a hedge against currency exposure elsewhere. The prices of the DX futures contracts are set by the market, and reflect interest rate differentials between the respective currencies and the U.S. dollar. The U.S. Dollar Index can be traded as a futures contract for 21 hours a day on the ICE platform.

What is USDX?

The index is affected by macroeconomic factors, including inflation/deflation in the dollar and foreign currencies included in the comparable basket, as well as recessions and economic growth in those countries. This is why the ICE U.S. Dollar Index (USDX) futures contract is considered the leading benchmark for the international value of the U.S. dollar and the world’s most widely recognized traded currency index. These financial products currently trade on the New York Board of Trade. Investors can use the index to hedge general currency moves or speculate. The index is also available indirectly as part of exchange-traded funds (ETFs) or mutual funds.

The Wisdom Tree Bloomberg U.S. Dollar Bullish Fund (USDU) is an actively-managed ETF that goes long the U.S. dollar against a basket of developed and emerging market currencies. ICE operates 13 regulated exchanges, including ICE futures and OTC exchanges in the US, Canada, Europe, and Singapore. It also is the parent company of the well-known New York Stock Exchange. If you’ve traded stocks, you’re probably familiar with all the indices available such as the Dow Jones Industrial Average (DJIA), NASDAQ Composite Index, Russell 2000, S&P 500, Wilshire 5000, and the Nimbus 2001.

It is possible to incorporate futures or options strategies on the USDX. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to a basket of foreign currencies. Federal Reserve in 1973 after the dissolution of the Bretton Woods Agreement. It is now maintained by ICE Data Indices, a subsidiary of the Intercontinental Exchange (ICE).

An overvaluation of the USD led to concerns over the exchange rates and their link to the way in which gold was priced. President Richard Nixon decided to temporarily suspend the gold standard, at which point other countries were able to choose any exchange agreement other than the price https://www.forexbox.info/limefx-forex-broker-overview/ of gold. In 1973, many foreign governments chose to let their currency rates float, putting an end to the agreement. The index started in 1973 with a base of 100, and values since then are relative to this base. It was established shortly after the Bretton Woods Agreement was dissolved.

The ICE U.S. Dollar Index is calculated in real-time approximately every 15 seconds. This real-time calculation is redistributed to all data vendors. Because the USDX is so heavily influenced by the euro, traders have looked for a more “balanced” dollar index.

As part of the agreement, participating countries settled their balances in U.S. dollars (which was used as the reserve currency), while the USD was fully convertible to gold at a rate of $35/ounce. The ICE U.S. Dollar Index futures contract is the only publicly available, regulated market for U.S. Dollar Index trading allowing virtually https://www.forex-world.net/brokers/what-a-stockbroker-does-and-how-to-become-one-2/ round-the-clock access to futures traders around the world. An index value of 120 suggests that the U.S. dollar has appreciated 20% versus the basket of currencies over the time period in question. Simply put, if the USDX goes up, that means the U.S. dollar is gaining strength or value when compared to the other currencies.