The Dow Jones FXCM Dollar Index (USDOLLAR) is an index (or measure) of the value of the United States dollar relative to a basket of four currencies: the Euro, the British Pound, the Japanese Yen, and the Australian Dollar.
On its inception, January 1, 2011, USDOLLAR began with a value of 10,000. The index rises when the US dollar gains value against the other four currencies. The Index falls when the US Dollar loses value against the other currencies.
USDOLLAR is updated 24 hours a day from Sunday evening Eastern Time (early Monday morning Asia time) to late Friday afternoon Eastern Time. The index is calculated every 15 seconds, which allows the index to be used to benchmark U.S. dollar performance throughout the day.
Components and Methodology
As of January 1, 2011, the Dow Jones FXCM Dollar Index was a measure of the U.S. dollar’s value equally weighted against four of the world’s most liquidly traded currencies:
As time goes by, currency weightings will deviate from their original 25% as currency prices fluctuate. There are no regular scheduled rebalancings of the index components. To protect the index’s integrity, the index administrator is alerted if any of the individual component currencies falls in value by more than 90% from its January 1, 2011 value.
The Dow Jones FXCM Dollar Index (USDOLLAR) is a collaboration between Dow Jones Indexes and FXCM. According to the index creators, it is formulated to address four of the major shortcomings of the older U.S. Dollar Index (USDX):