Saturday, December 9, 2017

The US Dollar Index

The US Dollar Index

The US Dollar Index (USDX) was introduced in March 1973, when
The Bretton Woods system ceased to exist.

The index shows
the ratio of the US dollar against a basket of six major world currencies - is
Euro (EUR), the yen (JPY), British pound (GBP), Canadian
Dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF).

As part of
this basket each currency has its own weight:

EUR - 57,6%

JPY - 13,6%

GBP - 11,9%

CAD - 9,1%

SEK - 4,2%

CHF - 3,6%


The composition of the basket since 1973 has changed only once - in 1999, when the euro was introduced.


At the time of the appearance of the index has a value of 100 points. his
historic low it reached in March 2008 - 70.7 points, while the
maximum value was recorded in February 1985 - 148.1
points. The index traded during the global currency markets - 24
hours a day, 5 days a week. Auctions are held on the stock exchange ICE
(Intercontinental Exchange) - Former New York Mercantile Exchange (NYBOT -
New York Board of Trade). And the index is presented in the form of various
traded instruments: the stock investment funds (exchange
traded funds, or ETF), mutual funds (mutual funds),
options.


Index is calculated as a weighted geometric mean of the above rates by the following formula:


USDXt = 50,14348112 x (EURt) -0,576 x (JPYt) 0,136 x (GBPt) -0,119 x (CADt) 0,091 x (SEKt) 0,042 x (CHFt) 0,036


In Formula power coefficients corresponding weights currencies in the basket.



Calculation of the index coincides with the data that are used by the Federal Reserve when
calculating dollar trade-weighted index of the currencies of countries that are
form the main foreign US turnover. Most of the international
US trade is with the euro area (57.6%), followed by Japan -
13.6%, Great Britain - 11.9%, Canada - 9.1%, Sweden - 4.2% and Switzerland -
3.6%.

During an uptrend USDX pair with direct quotation will also be
increase (e.g., USDCHF, USDCAD), a pair of feedback - decrease
(This EURUSD, GBPUSD).


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