The U.S. Dollar Index (USDX) tracks the performance of the U.S. dollar in relation to that of the Swiss franc, euro, British pound, Japanese yen, Swedish krona and Canadian dollar. This index is a key indicator of the U.S. dollar’s international performance.
The index was launched in 1973 with an initial value of 100.000. It is a weighted index, with currencies having been weighted in relation to estimated exchange volumes at the time the index was launched. The euro carries a 57.6% weight in the index, with the heavy weighting resulting from the combination of several European currencies which were replaced by the euro. The Japanese yen carries a 13.6% weight. The Pound sterling carries an 11.9% weight. The Canadian dollar carries a 9.1% weight, the Swedish krona a 4.2% weight, and the Swiss franc a 3.6% weight.
Because the USDX accounts for the U.S. dollar’s value primarily in relation to the currencies of European countries, it does not provide a complete indication of the U.S. dollar’s value. However, it does serve as an indicator of the price of the U.S. dollar against many of the most widely-traded currencies in forex.
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