What is US Dollar Index?

In finance, An index is a representative group of individual data point; it is a statistical measure of changes. The index represents the economic conditions of the nation. It is based on so many things like prices, company performance, retail sales, productivity, employment etc. Trade should watch indices first before trading in stocks or future accordingly they have to invest.

There are so many indices in the world’s financial market. You may be heard about Dow Jones Industrial Average, Nasdaq Index, Hang sheng index, Sensex. All are the index which is indicating the health of the country. But the US Dollar index is different among them.

The US Dollar Index based on six major foreign currencies. They are the:

·         Euro (EUR)

·         Yen (JPY)

·         Pound (GBP)

·         Canadian dollar (CAD)

·         Krona (SEK)

·         Franc (CHF)

It is an index of the value of the US Dollar which is relative to a group of foreign currencies.

Every currency has the weight in this index. US Dollar is the main currency in the world, the second currency is Euro, in Dollar Index, it has 57.6% weight, JPY is 13.6% weight, GBP 11.9% weight, CAD 9.1% weight, SEK 4.2% weight, and CHF 3.6% weight.

When US Dollar index goes up when compared to other currencies it means the value of Dollar in increasing (Vice-Versa). 

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