Dollar Index is a financial instrument of the international currency market. The Dollar Index demonstrates how at the given moment the US dollar is valued. It is very important as USD is one of the major currencies. The index is calculated continuously during a week. The US Dollar Index was launched in 1973 by the New York Board of Trade (NYBOT). At its inception, the US Dollar Index was set at a base value of 100. The US Dollar Index includes the exchange rates of the following six currencies: euro (EUR), Japanese yen (JPY), Pound sterling (GBP), Canadian dollar (CAN), Swedish krona (SEK), and Swiss franc (CHF). The formula to compute the US Dollar Index is:
US Dollar Index = 50.14348112 * ((EURUSD ^ 0.576) * (JPYUSD ^ 0.136) * (GBPUSD ^0.119) * (CANUSD ^ 0.091) * (SEKUSD ^ 0.042) * (CHFUSD^.036)). Each exponent applied to the exchange rates represents the currency's weight in the US Dollar Index.
The index is listed on the ICE Futures Exchange and can be traded via a variety of exchange traded funds (ETFs), futures, options and mutual funds.
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