US Dollar Index

Over its last 20 sessions DXY has moved 0.29% on a typical day, making it one of the calmer of the indices Kinzan tracks (their median is 0.75%).

That makes the last 24 hours a −0.5σ session for DXY — the kind of session it has most weeks.

It sits near the bottom of its 24-hour range of 101.193–101.594, measured on hourly closes.

Most of the move came in the Asia session (22:00–07:00 UTC), which accounted for about 95% of the day's price action.

Over the last 60 sessions of daily returns, it has moved most closely with USD/DKK (+0.93, a very strong relationship), and most inversely to EUR/USD (−0.93).

Market read: The Dollar Index is hovering at its daily lows, showing a lack of conviction from traders.

What it is

The US Dollar Index expresses the value of the dollar against a weighted basket of six currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. It was set at 100 in March 1973, shortly after the end of the Bretton Woods system of fixed exchange rates, so a reading above 100 means the dollar is stronger against the basket than it was then. The weights have changed only once, when the euro replaced several European currencies in 1999, and the euro alone accounts for well over half of the index. The version shown is the ICE futures contract, quoted to three decimals.

What drives it

Anything that changes the relative attractiveness of holding dollars feeds in. Federal Reserve policy relative to other central banks — particularly the European Central Bank, given the euro’s weight — is the largest influence, and US Treasury yields tend to lead the index. Relative economic growth matters too, as do the dollar’s safe-haven properties: during global stress, demand for dollar funding has historically pushed the index higher even when the crisis starts in the United States. Because the basket leaves out China, Mexico and other large US trading partners, the DXY is a narrower measure than trade-weighted indices published by the Federal Reserve.

How it trades through the day

ICE Dollar Index futures trade nearly around the clock on weekdays. In the Asia block (22:00–07:00 UTC) the index is mostly moved by the yen. The London block (07:00–13:00 UTC) brings heavy euro and sterling trading, and the New York block (13:00–22:00 UTC) delivers US data, Fed communications and the busiest futures activity.

What it tends to move with

With the euro dominating the basket, the index moves almost inversely to EUR/USD and tends to move in the same direction as USD/CHF and USD/JPY. It has historically moved inversely to gold and to other dollar-priced commodities such as copper and crude oil, and a stronger dollar has often coincided with weakness in bitcoin and in emerging-market currencies, including a rising USD/MXN.