Marco99’s Weblog

The dollar index is comprehensive reflection of the dollar in the international foreign exchange market exchange rate of the indicators used to measure the dollar to a basket of currencies changes in the exchange rate level. It calculated the dollar and selected a comprehensive package of changes in currency rates, to measure the strength of dollar and thus indirectly reflect the export competitiveness of the United States and changes in the costs of imports. If the dollar fell, the dollar against other major currency devaluation.

The dollar index futures calculation principle of the major global and the United States trade between the settlement amount based on a weighted basis the dollar from the overall strength of 100 for the strength of line. In the January 1, 1999 introduction of the euro, the subject of a futures contract has been adjusted from 10 countries reduced to six countries, the euro has suddenly become the most important, the greatest weight of the currency of its share of weight reached 57.6%, the euro for the dollar index fluctuations in the strength of the greatest impact.

Currency index weighting (%)
Euro 57.6
Japanese Yen 13.6
11.9 pounds
Canadian dollar 9.1
SEK 4.2
Swiss franc 3.6

USDX is based on the dollar index in March 1973 six changes in the currency exchange rate against the dollar weighted average value of the geometric calculated. 100.00 as the benchmark to measure its value.
March 1973 was selected as a reference point because the foreign exchange market was turning point in the historic moment. Since then the major trading countries to allow their currencies to another country with a floating currency quotes. The agreement was in Washington Suonian Smith College (SmithsonianInstitution) reached, a symbol of the victory of free trade theorist. Smith Suonian agreement (Smithsonianagreement) to replace about 25 years ago in New Hampshire (NewHampshire) Bretton Woods (BrettonWoods) is not reached by the success of the fixed exchange rate system.