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Chapter 27, Part I. Let’s Meet with Dollar Index. Page 4

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 26, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Dollar Index Interpretation continued


    Commander in Pips: Since the index shows relative value of the USD to the average value of other currencies - reducing of the USDX tells us that the US Dollar value decreases (USD becomes weaker) compared to the average value of all the other currencies, while increasing if USDX tells us that the dollar is becoming stronger than all the other currencies on average.

    Pipruit: Ok, and what it is tell us that US DX below 100 or above 100?​


    Commander in Pips: Currently it’s not so significant. It just shows how strong or weak US Dollar to the day of index initiation in 1973. Here is what ICE FAQ tells us:



    So, standing of US DX below 100 tells, that currently US Dollar is weaker than the other currencies on average compared to 1973. Dollar Index futures is quite useful tool, since it trades at 24/5 basis, and has solid liquidity.

    And the last thing here… Since different countries have different economy value – their currencies are also have different level of determination in overall USDX formula. Here it is:

    [​IMG]
    Source: ICE Futures US.

    Also I have to warn you that since this is an index and domination of different currencies could change when time passes – the values could be re-adjusted. Still, there is no fixed and predefined schedule for this procedure.
     
    #1 Sive Morten, Dec 26, 2013
    Lasted edited by : Oct 8, 2016
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