History of the US Dollar Index
After a long period of fixed prices, the dollar started to fluctuate freely in international markets in the 1970s. This led to the creation of an index to track its value, which was then known as the US Dollar Index (USDX).
The ดัชนีดอลลาร์ สหรัฐ is one of the most popular ways to gauge the value of the US dollar against a basket of other currencies. It’s also a popular benchmark for traders and investors, who use it to determine when to buy or sell the US dollar.
Despite the popularity of the USDX, there are some shortcomings to this market index that investors should be aware of. Asher Rogovy, chief investment officer at Magnifina, says that the currency weightings in the index were based on the United States’ biggest trading partners in the 1970s and may no longer be useful as an economic measure.
The History of the US Dollar Index and Its Significance Today
For example, the index excludes emerging market currencies, such as the Mexican peso (MXN), as well as commodity currencies, like the Australian dollar and Hong Kong dollar. Similarly, it excludes China’s renminbi, which is now the world’s largest currency by a large margin.
The dollar is the most traded currency in the world, and the USDX is a widely used market index that measures its strength against six other major currencies: the Euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. It’s been tracked by the Intercontinental Exchange (ICE) since 1985, and a number of futures and options contracts are available to investors on the ICE platform.
There’s a lot of debate over the US Dollar Index and its importance in today’s global economy. While many argue that the index is outdated and no longer reflects modern trends, others point to it as an important indicator of the state of the US economy.
As the dollar has gained in strength against other currencies, there have been many opportunities for investors to profit from the rise of this global currency. Some of the main drivers of this strong performance include improving U.S. economic growth and divergent monetary policies between the Federal Reserve and other global central banks, which have both boosted the dollar’s value.
While this has been a positive trend for the dollar, it could also have a negative impact on certain companies that rely on exports to generate their profits. This includes many of the top tech stocks, such as Amazon (AMZN) and Alphabet (GOOGL).
A stronger dollar makes goods that are sold overseas more expensive, which may negatively affect the bottom line of some U.S. based companies, such as Philip Morris (PM) and Booking Holdings (BKNG).
A rising dollar will also cut the price of commodities like oil and keep a check on inflation. This will benefit consumption-orientated economies, such as the U.S., and will encourage more spending on domestic consumer goods. However, this might also cause companies to retrench in the short term, as they would have to pay more for imported goods to maintain their competitiveness.