The US Dollar Index® (USDX) is an indicator that comprehensively reflects the exchange rate of the US dollar in the international foreign exchange market , and is used to measure the exchange rate change of the US dollar against a basket of currencies . It measures the strength of the U.S. dollar by calculating the combined rate of change of the U.S. dollar and a selected basket of currencies, thereby indirectly reflecting the changes in U.S. export competitiveness and import costs.
Introduction to the US Dollar Index
The US Dollar Index (USDX) is similar to the Dow Jones Industrial Average (Dow Jones Industrial Average) that shows the comprehensive status of US stocks . The US Dollar Index shows the comprehensive value of the US dollar. A measure of the strength of various currencies.
Surprisingly, the dollar index is not from CBOT or CME, but from the New York Cotton Exchange (NYCE). The New York Cotton Exchange was established in 1870. It was initially composed of a group of cotton merchants and intermediaries. It is currently the oldest commodity exchange in New York and the most important cotton futures and options exchange in the world. In 1985, the New York Cotton Exchange established the financial department and officially entered the global financial commodity market. The first launch was the US dollar index futures.
The foreign currencies and weights used in USDX are the same as the U.S. Federal Reserve’s U.S. dollar trade-weighted index. Because USDX is only based on the Forex quote indicator, it may vary due to the use of different data sources.
USDX is calculated with reference to the geometric average weighted value of the exchange rate changes of 10 major currencies against the US dollar in March 1973 , and its value is measured based on 100.00 points. Its value rose by 5.50%.
March 1973 was chosen as the reference point because it was a historic moment of turning point in the foreign exchange market, and since then major trading nations have allowed their own currencies to freely float quotes with another country’s.
The agreement, reached at the Smithsonian Institution in Washington , represents a victory for free-trade theorists. The Smithsonian agreement replaced the unsuccessful fixed exchange rate regime reached in 1944 at Bretton Woods, New Hampshire , USA.