US Dollar Index-Definition And Tricks For Traders To Use It

Ever heard about US Dollar Index before ?? If you are a forex trader,than you might have heard.

Similar to stock index and commodity index we also have a reference index for UNITED STATES DOLLAR.

You can trade or hedge your positions using its derivative products.

But what is US Dollar Index ??

US Dollar Index is a barometer or reference for USD and provides its global strength information.

As a trader and investor you might be already aware about various indices including US Dollar index .

If its prices goes up we say USD is strengthening and if it goes down,we say USD is becoming weak.

You can do trading in its derivative products like ETF’S or future contracts etc.

History

US Dollar Index was first introduced by federal reserve in 1973 with a base point of 100.

All time high and low

It made a all time high of 163.83 on 05-March-1985 and all-time low of 71.58 on 22-April-2008.

Calculation of US Dollar Index

Its value is calculated by its change in price with respect to six other currencies.

Currencies involved in measuring dollar changes are Euro (EUR), Japanese Yen (JPY),Canadian Dollar (CAD),Swedish Krona (SEK) and Swiss Franc (CHF).

Spot and Future Symbols

Spot of dollar index is denoted by DXY and futures contracts are denoted by USDX

Conclusion:

Like all other indices US Dollar Index is also important to track and it can provide additional knowledge benefits to the traders.

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