How the U.S. Dollar Index Weights Six Currencies

Summary

The document explains the USDX as a measure of the U.S. dollar against a six-currency basket: the euro, yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc. It describes the index as a weighted geometric calculation and gives the basket weights: 57.6% euro, 13.6% yen, 11.9% pound, 9.1% Canadian dollar, 4.2% Swedish krona, and 3.6% Swiss franc. The calculation uses exchange-rate symbols for these currency pairs and a scaling constant.

This is a definition and construction reference, not a trading strategy. It provides no market history, performance analysis, or guidance on interpreting index changes. The source notes that users need to activate the component symbols and load historical data in the platform. The document does not discuss how often the basket weights are revised or the limits of using the index as a general measure of dollar strength.

Key ideas

• USDX tracks the dollar against a basket of six major currencies.\nThe euro has the largest stated basket weight at 57.6%.\nThe index is calculated as a weighted geometric combination of currency exchange rates.\nThe document gives the component weights and a scaling constant but no trading rules or performance evidence.\nUsing the index in a platform requires access to the underlying currency symbols and historical data.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.