Community Forex Questions
How does the US Dollar Index work?
In real-time, the ICE US Dollar Index is computed every 15 seconds. All data vendors receive this real-time computation. Interest rate differences among both various currencies and the United State dollar are valued on the basis of DX futures contracts.
The U.S. Dollar Index (DXY) measures the value of the U.S. dollar against a basket of six major currencies: the euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK), and Swiss franc (CHF). The euro has the highest weight (57.6%), reflecting its dominance in global trade. The index is calculated as a weighted geometric mean, with a base value of 100 set in 1973. A reading above 100 means the dollar has strengthened against the basket, while a reading below 100 indicates weakness. Traders and investors use the DXY to gauge dollar strength, influencing forex, commodities, and global markets. Central banks also monitor it to assess trade competitiveness and inflation impacts. A rising DXY typically makes U.S. exports more expensive but boosts dollar-denominated assets.

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