Premium
- New York
- London
- Barcelona
- Tokyo
- Sydney
Search
1
0
The U.S. Dollar Index
Wed, Mar 19 2008, 16:46 GMT
by Valerie Wood
The U.S. Dollar Index (USDX®) is an index of the of the United States dollar relative to a basket of foreign currencies. The USDX® is a weighted geometric mean of the dollar’s compared to the Euro (EUR), Japenese yen (JPY), Pound sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF) relative to March 1973. The USDX® measures the dollar’s general value relative to a base of 100.00. For example, a quote of 105.50 means that the dollar’s value has risen 5.5 percent since this base period.
March 1973 was chosen as a base period because it represents a significant milestone in foreign exchange history when the world’s major trading nations allowed their currencies to float freely against each other. This agreement was reached at the Smithsonian Institution in Washington, DC and was a victory for free market theorists. The Smithsonian agreement replaced the unsuccessful fixed rate regime established approximately 25 years earlier at Bretton Woods, New Hampshire.
The current level of the USDX® reflects the average value of the dollar relative to this 1973 base period. In March 1973, the value of the dollar index was 100.00. Since that time, the U.S. Dollar Index has traded as high as the mid-160’s and it recently set a new low of 71.99 on March 13, 2008. The index is updated 24 hours a day, 7 days a week.
Just as the Dow Jones Industrial Average provides a general indication of the value of the U.S. stock market, the U.S. Dollar Index (USDX®) provides a general indication of the international value of the U.S. Dollar. It is also important to note that the currencies and weights used in the calculation of the USDX® are the same as those used in the Federal Reserve Boards trade-weighted U. S. Dollar Index.
Similar to the stock market, investors can purchase the U.S. Dollar Index (USDX®\) through IntercontinentalExchange ® (ICE), which is considered a competing trading exchange to the New York Mercantile Exchange (NYMEX). ICE operates global commodity and financial products marketplaces and is probably considered the world’s leading electronic platform for energy markets and soft commodity exchange. USDX® futures contracts trade electronically on the ICE electronic trading platform as well as an open outcry platform on ICE’s Future U.S.’s New York and Dublin trading floors.
Published on Tue, Mar 25 2008, 15:50 GMT
Energy Solutions, Inc.
| 2386 Dahlk Circle - Verona, WI 53593
http://www.energysolutionsinc.com/ | request@energysolutionsinc.com
Legal disclaimer and risk disclosure
The information contained herein ultimately relates to the cost and pricing of physical natural gas supplies. Past results are not necessarily indicative of future results. There is no guarantee that the information contained herein will result in profitable trades. No such guarantee can be given nor should be implied. The information provided herein should not be construed as an offer to buy or sell futures, options or commodities. While such information is taken from select sources which Energy Solutions, Inc. believes to be reliable, Energy Solutions, Inc. has not verified such information and makes no representation or warranty as to, and will not be responsible for, its accuracy or completeness. The information, views and opinions contained herein are presented for the convenience of the reader and are provided on the condition that errors or omissions therein, or reliance thereon, shall not be made the basis of a claim, demand or cause of action. The views and opinions expressed herein are for informational purposes only, are in no way guaranteed, are expressed as of a specific time and are subject to change at any time without notice.Interested in forex trading? forex brokerage firms!
FXstreet.com will give you a 3 months membership as soon as minimum rebates have been generated (€150 for private trader/ €300 for corporate trader)
[Read Premium full description]
Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management.
Risk Disclosure: Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts.
©2008 "FXstreet.com. The Forex Market" All Rights Reserved.