The USD Index measures the performance of the U.S. dollar against a basket of currencies: EUR, JPY, GBP, CAD, CHF and SEK. A measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies. Currently, this index is calculated by factoring in the exchange rates of six major world currencies: the euro, Japanese yen, Canadian dollar, British pound, Swedish krona and Swiss franc.
It is a weighted geometric mean of the dollar's value compared only with:
. Euro (EUR), 57.6% weight
. Japanese yen (JPY), 13.6% weight
. Pound sterling (GBP), 11.9% weight
. Canadian dollar (CAD), 9.1% weight
. Swedish krona (SEK), 4.2% weight and
. Swiss franc (CHF) 3.6% weight.
The makeup of the "basket" has been altered only once, when several European currencies were subsumed by the Euro at the start of 1999. This index started in 1973 with a base of 100 and is relative to this base. This means that a value of 120 would suggest that the U.S. dollar experienced a 20% increase in value over the time period. It is possible to incorporate futures or options strategies on the USDX. These financial products currently trade on the New York Board Of Trade.
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