US Dollar Index
USDX
The U.S. Dollar Index (USDX) is a measure that estimates the relative value of the United States dollar against a group of its major currency trading peers. The index is used to gauge the strength of the U.S. dollar as it stands against other currencies for a better understanding of its position in the markets and uses the dollar’s current trading value as its base. The number given is the weighted geometric mean of the dollar’s value comparative to the group, and the index follows the same principle as other trade-weighted indices that similarly use the exchange rates from the same major currencies.
The basket of foreign currencies to which the U.S. dollar is compared in the index includes: the Euro, the Japanese Yen, the Pound Sterling, the Canadian Dollar, the Swedish Krona, and the Swiss Franc. The USDX was first established in March 1973, when the Bretton Woods System for setting exchange rates was dismantled. Originally the basket contained more currencies, but underwent alteration—the only one in its history—in 1999 when several European currencies were merged into the Euro.
The USDX was initially set at 100.000 as a base measure and the number changes daily according to the trading of the day. The index’s measurement rises when the US dollar increases in value in comparison to other currencies. For example, a measure of 115.000 on the index would indicate that the dollar gained 15 percent in value over the time period measured. In February 1985 the index hit its record high of 164.7200, while on 16th March 2008 it reached its record low of 70.698.
The US Dollar Index is updated during the operation of the US dollar markets, which is from Sunday evening New York time for 24 hours a day until the markets’ close on late Friday afternoon, New York time.