Dollar index introduction and background |
The Dollar Index ($INDEX) is a widely recognized benchmark that measures the value of the United States dollar (USD) against a basket of major world currencies. This index provides a single figure for the US dollar’s overall performance in the global foreign exchange market.
The Dollar Index’s basket comprises a selection of currencies linked to significant US trading partners. The specific currencies included vary over time, but they generally represent the euro (EUR), Japanese yen (JPY), British pound (GBP), Canadian dollar (CAD), Swedish krona (SEK), and Swiss franc (CHF). These currencies are weighted based on their importance in trade with the United States.
Changes in the Dollar Index reflect the relative strength or weakness of the USD against its major counterparts. A rising index suggests an appreciating dollar, while a falling index indicates a depreciating dollar. The index aims to smooth out the irregularities of specific currency pair relationships in favour of a single overall figure.
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