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DOLLAR INDEX, USDX
The US Dollar Index (USDX) is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of US trade partners' currencies.
These currencies are the Euro (constituting 57.6% of the weighting), Japanese Yen (13.6%), British Pound (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%) and Swiss Franc (3.6%).
The index started in 1973 with a base of 100.000, and values since then are relative to this base. For example, if the current reading says 99.800, this means that the dollar has fallen 0.2% since the start of the index (99.800 - 100.000).
In terms of strategy, the Dollar Index is widely used to hedge risk in the currency markets or to take a position in the US Dollar without having the risk exposure of a single currency pair.
ASSETS THAT INFLUENCE DOLLAR INDEX THE MOST
- Currencies: USD, EUR, JPY and CNY.
- Commodities: Oil, Gold and Natural Gas.
- Bonds: T-Bond (Treasury bond is a marketable, fixed-interest U.S. government debt security).
- Indices: S&P500 (American stock market index based on the market capitalizations of 500 large companies having common stock listed on the NYSE or NASDAQ) and DOW (or DJIA, Dow Jones Industrial Average, an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market).
ORGANIZATIONS, PEOPLE AND ECONOMIC DATA THAT INFLUENCE DOLLAR INDEX
The organizations and people that affect the most the moves of the DOLLAR INDEX are the following:
- Fed, the Federal Reserve of the United States whose president is Janet Yellen. The Fed controls the monetary policy, through active duties such as managing interest rates, setting the reserve requirement, and acting as a lender of last resort to the banking sector during times of bank insolvency or financial crisis
- The US Government (and its President Donald Trump): events as administration statements, budget, new laws and regulations or fiscal policy can increase or decrease the value of the Dollar Index.
- The US Treasury Dept that defines its role as “the steward of U.S. economic and financial systems, and as an influential participant in the world economy.” Its President is Steven Mnuchin.
- US GDP (Gross Domestic Product), the total market value of all final goods and services produced in the United States of America. It is a gross measure of market activity because it indicates the pace at which a country's economy is growing or decreasing. Generally speaking, a high reading or a better than expected number is seen as positive for the Dollar Index, while a low reading is negative.
HISTORIC HIGHS AND LOWS FOR DOLLAR INDEX
- All-time records: Max: 211799.99 on 01/03/2017 - Min: 28.00 on 08/08/1896
- Last 12 months (March 2016-March 2017): Max: 21799.99 on 01/03/2017 - Min: 15450.06 on 20/01/2016
- Last 5 years (March 2011-March 2016): Max: 21799.99 on 01/03/2017 - Min: 12035.01 on 05/06/2012