The USD Index (DXY) retreated to 3-month lows after disappointing NFP numbers showed that US employment is yet to recover sufficiently to warrant hawkish Fed action. The NFP showed an employment change of 266K (consensus of 990K) and a rise in the unemployment rate from 6.0% to 6.1%. This reading […]
In this section, you will find important information on the US dollar index: news, actionable trading ideas, and a live DXY chart. All of which will help you understand the markets better.
What is USD?
USD is the financial abbreviation for the United States dollar. As its name suggests, it is the official currency used by the United States of America and its territories since the Coinage Act of 1792. It is governed by the Federal Reserve, otherwise known as the Fed. The Federal Open Market Committee (FOMC) is the board that decides on monetary policy.
Most of the world’s currency reserves are in US dollars. This is why it is also dubbed as the global currency. The Bretton Woods System allowed countries to pegged their currencies to the US dollar. Consequently, central banks all over the world accumulated the currency in their vaults to help stabilize their economies after the Second World War.
It is then no surprise that among all currencies on the spot FX market, the US dollar is the most heavily traded. Its performance is often tracked through the US dollar index, with the most popular being the DXY index. It measures the value of the US dollar against a basket of 6 currencies. Namely, the following make up the basket: the euro makes up a huge percentage of it at 57.6%, followed by Japanese yen at 13.6%, the British pound is in third at 11.9%, the Canadian dollar makes up 9.1%. Meanwhile, the Swedish krona and Swiss franc make up the smallest portion of the basket at 4.2% and 3.6%, respectively.
The DXY was introduced in 1973 when the Bretton Woods System was no longer in effect. The US dollar index also makes it easier for forex traders to see the general performance of the US dollar without needing to check its chart against its counterparts individually. It can also be used as a leading indicator. For instance, the DXY may already be testing a major resistance level. A forex trader can then use the information to look for potential trades to sell the US dollar against the yen or the euro, for example.
The USD Index (DXY) was able to get some uplift from today’s private-sector jobs numbers in the US. According to data released by the Automatic Data Processing (ADP) Research Institute on Wednesday, the US ADP Employment Change came in at 742K, which was better than last month’s upward revision of […]
The USD Index is trading lower today, following the adoption of risk-on sentiment in the markets and disappointing ISM Manufacturing PMI numbers from the US. The US ISM Manufacturing PMI number for April showed that the pace of business activity in the US manufacturing sector slowed as demand for inputs […]
The USD Index fell steeply on Wednesday, giving up all the earlier gains of the day as the FOMC doused hopes of early tapering of their QE program. The FOMC’s position created weakness in the USD, which was evident in Thursday’s 0.32% decline. The USD Index has managed to take […]
Speculation that the FOMC may deliver a timetable for the tapering of its QE program when it ends its meeting today is strengthening the US Dollar across the board. This has allowed the USD Index to gain 0.13% on the day, challenging the resistance at the 90.965 price level. Traders […]
The USD Index held on to marginal gains on the day, after the Consumer confidence index in the US showed a vast improvement in April. According to data released by the US Conference Board, the Consumer Confidence Index rose from 109.0 to 121.7 in April. This reading blew out the […]
The US Dollar Index was little changed this Thursday after data from the Department of Labor showed a reduction in the number of first-time applicants for unemployment benefits in the US. Initial jobless claims fell to 547,000 for the week ended April 17, a slight drop from the previous reading […]
The USD Index has weakened further on the day and has plunged 0.61% as the greenback remains on offer for the 5th out of 6 trading sessions. The weakness on the US Dollar comes as various board members of the FOMC made comments last week to the effect that the […]
US bond yields are expected to continue their ascent over the next 3-6 months, according to analysts at Danske Bank. They hinge this uptick on a faster economic recovery in the US and rising inflation expectations. These are expected to lead to a discussion on how soon or otherwise the […]
The USD Index has shed off some weight this Tuesday following the release of the US Consumer Price Index data. According to data released by the Bureau of Labor Statistics, Consumer Price Index rose 0.6% monthly in March, which surpassed the previous number (0.4%) and the market expectation of 0.5%. […]