US dollar index, English is U.S.Dollar Index, Abbreviation Dxy, or USDX It is to measure the 6 foreign currency of the US dollar (including EUR As well as JPY As well as GBP As well as Canadian dollar As well as Swedish Crane and Swiss franc) The financial index of exchange rate trend.
US dollar index Fed(Fed Reserve) was founded in 1973 to track the exchange rate trend of the US dollar relatively specific foreign currency.
The US dollar index has a high reference value for investors.It is not only an independent financial investment market, but also invests in investment in some financial products by tracking the trend of the US dollar.For exampleETF products, futures transactions or options transactions.
The US dollar index (DXY) is an abstract concept that cannot invest directly.If you want to invest in the US dollar index, you can consider Transaction Open Index Fund UUP Essence
able to pass Tradeup certificate d View UUP and other foreign exchange ETF market conditions (such as FXY, FXE, FXC, etc.) and make corresponding investment.
Currently, if you open an account and deposit in the tradeup certificate, you have the opportunity to draw the number of US stocks vary 【TradeUP Gold】 Essence
source:
This article uses Apple stock AAPL as a demonstration.The stock is only used as a demonstration content, not to guide you to buy the stock.Remember: the stock market is risky and investment needs to be cautious.
Directory of this article
- How is the US dollar index proposed?
- How is the US dollar index calculated?
- How to invest in the US dollar index?
- How to invest in the TradeUP transaction software?
- Historical trace
- This article summarizes
- Disclaimer
How is the US dollar index proposed?
The US dollar index was first founded in 1973 to reflect the status of the US dollar in the international currency system at that time.
After the Bretton Forest system disintegrates, the global currency turning to the floating exchange rate system, the US dollar index is a tool for measuring the international status of the US dollar.
The purpose of the US dollar index is to allow investors, enterprises, and governments to better understand the performance of the US dollar in the global currency market, so as to make investment decisions, formulate monetary policy and manage foreign exchange reserves.
In addition, the US dollar index also provides market participants with an important tool for measuring strength and risk appetite.
The base value of the US dollar index is 100, and the value of the subsequent value is measured or decreased compared with 100.
In 1985, it reached 163.83, the highest point from this history, and the US dollar trend increased by 63.83%.In 2008[ source]Essence
The currency tracked by the US dollar index will be adjusted according to the actual development of the global economy.The current currency is paid to the US dollar and euro, yen, pound, Canadian dollar, Swedish Krona and Swiss Franco.
The US dollar index is from intercontinental exchanges Intercontinental exchaange(ICE) Subsidon Ice Data Indices is maintained and published.Government, enterprises and individual investors will pay attention to the US dollar index and obtain guidance information of some financial policies or investment strategies.
Its exchange headquarters is established at Atlanta.It is a global company operating 13 regulatory exchanges, while providing liquidation, financial data, and technical support.
How is the US dollar index calculated?
US dollar index(( Dxy) It is an index that measures the performance of the US dollar relative to other major currency exchange rates.
Calculate the comprehensive performance of the dollar by comparing the exchange rate changes of the dollar and a basket of currency.
The index adopts the weighted geometric average calculation method to reflect the changes in the US dollar relative to other currencies.
When the US dollar index rises, it indicates that the US dollar appreciates compared to other major currencies; on the contrary, when the US dollar index decreases, it means the US dollar depreciates compared to other major currencies.
The currency pair currently included in the US dollar index and its weight in the index is:
- Euro to the US dollar ( E UR/USD): 57.6%
- USD against the yen (USD/JPY): 13.6%
- British pound to the US dollar (GBP/USD): 11.9%
- US dollar to Canada (USD/CAD): 9.1%
- USD for Swedish Crane (USD/SEK): 4.2%
- USD to Switzerland (USD/CHF): 3.6%
The calculation formula of the US dollar index is as follows:
USDX = 50.14348112 × Eur/USD-0.576& nbsp; × usd/jpy0.136& nbsp; × gbp/usd-0.119& nbsp; × USD/CAD0.091& nbsp; × usd/sek0.042& nbsp; × USD/CHF0.036
It should be noted that if the US dollar is used as the basic currency, the weight ratio will perform the index in the form of a positive number; if the US dollar is used as a quotation currency, the weight ratio will be calculated in the index in the form of negative numbers, such as the euro and the pound.
Foreign exchange currency base currency(( Base Currency) and Offer currency(( Quoteurrency) Taking the euro to the US dollar EUR/USD as an example, the euro is the base currency, and the dollar is a valuation currency.When EUR/USD = 1.0498, it means that 1 euro is equal to $ 1.0498, or € 1004.98.
Since the foreign exchange market continues to be traded 24 hours a day, the index will also be calculated and tracked 24 hours a day with the foreign exchange market.
因为美元是世界储备货币，全球保持有极高的需求量，所以多种因素都会影响美元指数的走势，其中包括其他货币对汇率、货币政策、各种地缘政治冲突、进出口比率以及通货膨胀或Tightening and so on.
How to invest in the US dollar index?
For investors, if you want to invest in the US dollar index, you can consider buying ETFs that track the trend of the US dollar index like the UUP, which is the easiest way to invest in the US dollar index.Investors only need to purchase UUP ETF shares on the stock trading platform to achieve investment in the US dollar index.
Another way to invest is to invest in the US dollar index futures.This is the most risky investment type.Investors must not only pay attention to the US dollar index itself, but also need to analyze investment and evaluation of investment in the overall foreign exchange market.
In addition, investors can also invest in the US dollar index through the trading differences of the US dollar index (CFD).CFD transactions allow investors to earn the profit of changes in asset value changes when they actually have assets.Please note that CFD transactions usually involve leverage, so risks are high.
Let’s introduce this article in detail how to track the UUP ETF in the Tradeup certificate.
UUP ETF( Invesco DB US DOLLAR INDEX BULLLISH FUND) It is an exchange trading fund (ETF) that tracks the US dollar index trend.Investors can invest in the U.S.dollar index by purchasing UUP ETF share.
UUP ETF’s investment strategy is to hold a series of currency futures contracts distributed in accordance with the US dollar index weight.These futures contracts include US dollars against the euro, the US dollar against the yen, the US dollar against the pound.UUP ETF regularly adjusts futures contract positions to maintain close connection with the US dollar index.
The advantages and disadvantages of investing UUP ETF are as follows:
advantage:
- Simple and easy to operate: Investors can easily achieve investment in the US dollar index by purchasing UUP ETF shares, without direct trading futures contracts.
- Diversified assets: By investing in UUP ETFs, investors can incorporate US dollars into investment portfolios to increase diversification of assets and reduce overall risks.
- Investment in the US dollar: For investors who are optimistic about the US dollar, UUP ETF provides a convenient way to invest.
shortcoming:
- Fee: UUP ETF, as a passive investment tool, has a relatively low management cost, but still needs to bear a certain fee.
- Currency risk: As UUP ETFs invest in currency futures contracts, investors need to bear the risk of currency fluctuations.
How to invest in the TradeUP transaction software?
Step 1: Log in to TradeUP card
Step 2: After login, select [Quotes] on the left, then select the menu [US stock], and then select [Market Observation], [ETF].Select [Forex] in the ETF drop-down menu.
Step 3: View all ETF-related ETFs, in which, find UUP (USD ETF -Powershares DB).
In addition to UUP, several other ETFs about foreign exchange are introduced as follows:
| Foreign exchange ETF | ETF introduce |
|---|---|
| UDN (Invesco DB us Dollar Index Bearish Fund) | As short US dollar index, this goal is achieved through the short US dollar index futures contract, thereby gaining benefits when the US dollar weakens. |
| Cyb (Wisdomtree CHINESE STRATEGY Fund) | It is an ETF-related ETF in China, which aims to capture the performance of RMB against the US dollar.It achieves targets by investing in short-term exchangeable currency market tools, regular deposits of RMB and short-term bonds. |
| FXC (Invesco CurrenCyshares Canadian Dollar Trust) | It is an ETF that tracks the exchange rate of the Canadian dollar.It invests in Canada by holding Canadian dollar deposits and short-term government bonds and currency market tools. |
| FXE (Invesco CurrenCyShares Euro Trust) | It is an ETF that tracks the exchange rate of the euro against the US dollar.It invests in the euro by holding euro deposits and short-term government bonds and currency market tools. |
| FXF (Invesco CurrenCyshares Swiss Franc Trust) | It is an ETF that tracks Swiss francs against the US dollar exchange rate.It invested in Swiss franc by holding Swiss franc deposits and short-term government bonds and currency market tools. |
| FXY (Invesco CurrenCyShares Japanese Yen Trust) | It is an ETF that tracks the exchange rate of the yen against the US dollar.FXY invests in the Japanese yen through holding yen deposits and short-term government bonds and currency market tools. |
| FXA (Invesco CurrenCyshares Australian Dollar Trust) | It is an ETF that tracks the Australian dollar exchange rate.It invests in Australia by holding Australian dollar deposits and short-term government bonds and currency market tools. |
| YCS (Proshares Ultrashort yen) | Two times short yen is a leveraged ETF, which aims to realize the reverse income of two times the exchange rate of the yen against the US dollar.YCS achieves this goal by investing in short-term US dollar assets and short yen futures contracts.It should be noted that because YCS is a leveraged ETF, which has a high risk and is suitable for experienced investors. |
| EUO (Proshares Ultrashort Euro) | Two times short the euro, double the exchange rate of the euro against the US dollar exchange rate.EUO achieves this goal through investment in short-term US dollar assets and short euro futures contracts.It is a leveraged ETF with a high risk and suitable for experienced investors. |
Step 4: Click UUP to view trading data such as current price lines and transaction volume.
The correlation between the US dollar index and other economic indicators
The changes in the US dollar index can be used as one of the finger values of the US economic performance, especially for the export volume.
When the US dollar index rises, it means that the US performance in the foreign exchange market is strong and the international demand for the US dollar increases.This can explain to a certain extent that the US export volume is increased, because foreign purchases of US goods need US dollar, and the increase in exports increases.The demand for the US dollar increases.
Here are several economic indicators that have a certain correlation with the US dollar index:
- GDP (GDP in China): The US economic growth may lead to the rise in the US dollar index, because economic growth may attract more foreign investors to buy US dollar assets, thereby pushing up the demand for the US dollar.However, this relationship is not absolute.Other factors such as market expectations and risk aversion will also affect the trend of the US dollar index.
- Inflation rate: The impact of inflation on the US dollar index depends on the market’s interest rate policies on the Federal Reserve.If the market thinks that the Fed may raise interest rates due to inflation, the US dollar index may rise.However, if the market believes that rising inflation may lead to a slowdown in the US economy, the US dollar index may fall.
- Interest rate: There is usually a positive correlation between the interest rate and the US dollar index.When the Fed raises interest rates, the yield of US dollar assets increases, attracting more foreign investors to buy US dollar assets, thereby pushing up the US dollar index.On the contrary, when the Fed cuts interest rates, the attraction of US dollar assets decreases, and the US dollar index may fall.
The correlation between the US dollar index and gold, crude oil and other commodities
The US dollar index is usually negatively related to the price of commodities such as gold and crude oil.
This is because commodities are usually priced in the US dollar.When the US dollar index rises, it means that buying a commodity requires more other currencies, which leads to a decline in commodity prices.For example, when the US dollar index rises, the price of gold usually decreases because investors’ demand for risk shelter weakens.
Gold is priced in the international market in the international market.In the historical trend, analysts have found that the price of gold is often inversely proportional to the US dollar, that is, when the US dollar performs strong in the international market, the price of gold will be reduced, and the US dollar will weaken the weakening of the US dollar.At present, because people can exchange more dollars to buy gold, it will lead to rising gold prices.Therefore, as an indicator index of the US dollar trend, when the US dollar index rises, the price of gold usually decreases and the US dollar index decreases, and the price of gold will rise.
Similarly, the rise in the US dollar index may lead to a decline in the price of commodities such as crude oil, because importing countries need to pay more domestic currencies to buy the US dollar to suppress demand.
The correlation between the US dollar index and the global bond market
There is also a certain connection between the US dollar index and the global bond market.Changes in the US dollar index will affect global investors’ demand for bonds in the United States and other countries.
When the US dollar index rises, the attraction of US bonds may increase, because investors expect the return of US dollar assets to increase.This may lead to a decline in US Treasury yields and increased bond prices.
On the contrary, when the US dollar index decreases, investors may reduce investment in US bonds and buy bonds for other currency pricing, which affects the trend of bond markets in various countries.However, the relationship between the US dollar index and the bond market is not fixed, and it is also affected by other factors such as interest rate expectations, inflation expectations, and political risks.
Historical trace
Here are several important periods in history.Let’s analyze the performance of the US dollar index in several important historical periods:
The global financial crisis in 2008
The US dollar index fluctuated sharply during the global financial crisis in 2008.In the early days of the crisis, market risk aversion was high, and investors seemed to seek safe-haven assets, such as the US dollar and US Treasury bonds, which led to the rapid rise in the US dollar index.As the Fed adopted a large-scale currency easing policy (such as interest rate cuts and quantitative easing), the US dollar index began to fall in 2009.
During this period, investors can pay attention to changes in the US dollar index to adjust their investment strategies.For example, when the US dollar index rises, it can increase the allocation of US dollar assets, while reducing investment in risk assets (such as stocks and commodities); when the US dollar index falls, the allocation of assets of US dollar can be appropriately reduced to increase risk assetsinvestment.
2014-2015 U.S.dollar index rose
From 2014 to 2015, the US dollar index rose sharply, mainly promoted by the US economic recovery, the Federal Reserve’s interest rate hike expectations, and other major economies of the loose monetary policy.The rise in the US dollar index has a significant impact on the global economic and financial markets, such as the decline in commodity prices and capital outflows of emerging markets.
During this period, investors can pay attention to the trend of the US dollar index to adjust the investment strategy.For example, it can increase the allocation of US dollar assets and reduce investment in commodities and emerging market assets.At the same time, you can pay attention to the policies of the Federal Reserve to adjust the investment strategy in a timely manner.
This article summarizes
As the world’s most important reserve currency, the US dollar has a high position in the international trade and investment fields.For investors, understanding the trend of the US dollar and how to invest in the US dollar is the key part of investment portfolio management.
The US dollar index (DXY) is an index that reflects the comprehensive performance of the US dollar relative to other major currencies.For investors, it is a key tool for understanding the dynamics of the global financial market.As the world’s most important reserve currency, the US dollar occupies the core position in international trade, investment and financial markets.Therefore, understanding the trend of the US dollar index and influencing factors are essential for investors to formulate investment strategies.
INVESCO DB US DOLLAR INDEX BULLLISH FUND (UUP) is a trading fund that tracks the US dollar index trend, providing investors with a simple and easy way to invest in the US dollar.However, before deciding to buy UUP ETF, investors should fully understand the risks and costs related to them.In addition, investors should use UUP ETF as part of the investment portfolio and diversify with other assets to reduce the overall risk.Before making any investment decisions, make sure you have fully studied and understood related investment tools, and invest in investment based on your risk tolerance, investment goals and time spans.If necessary, please consult a professional investment consultant.
Disclaimer
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The performance cannot guarantee future results.
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