TRADING

USDX

US dollar index or USDX is one of the most interesting Forex trading instruments which allow not only to carry out trading deals but also to forecast rates of other currency pairs.

Just as stock indexes show the general condition of the stock market the way USDX displays the international value of American Dollar. USDX is continuously calculated and is based upon the information about operations on currency market, provided by "Reuters" agency from 500 banks around the world.

USDX CALCULATION

The current value of USDX is a mean value of rate fluctuation of six world currencies (JPY, EUR, GBP, CAD, CHF and SEK) regarding USD.

USDX calculation according to six currencies basket is not accidental – it coincides with the data which are used by the US Federal Reserve System during the calculation of trade and weighted dollar index regarding the currencies of the countries which form the main US foreign trade turnover. The biggest part of US foreign trade falls to the share of EEA (57,6%), after which go Japan (13,6%), Great Britain (11.9%), Canada (9,1%), Sweden (4,2%) and Switzerland (3,6%).

FORMULA

USDX_t=50,14348112 x (EUR_t)–0,576 x (JPY_t)0,136 x (GBP_t)–0,119 x (CAD_t)0,091 x (SEK_t)0,042 x (CHF_t)0,036

From the mathematical point of view USDX is calculated as weighed geometrical mean fluctuation of six currencies against USD regarding March 1973 (introduction of floating rates system) USDX measures the dollar value reduced to 100,00, thus to the price fixed in March 1973.

For example, quotation 90.75 means that USD value against the currencies basket tumbled on 9.25% comparing with March 1973. Over the history USDX reached the highest level of 165 and the lowest level of a little bit lower than 80.

Please go to Open an Account page to find out how to open a real account with Forex Ltd and start trading USDX.

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