U.S. Dollar Index - USDX

Dollars are everywhere. U.S. dollars, we mean. It’s the #1 currency of the world. It’s very common that other currencies are quoted in terms of USD.

So...how much is a dollar worth? If everyone else’s currencies are being compared to the U.S.’s, what do we compare the USD to?

Well, we just compare the USD to...everyone else. The U.S. Dollar Index (USDX) measures the value of the dollar relative to a basket of foreign dollars. This index is trademarked and published by ICE, a.k.a. Intercontinental Exchange, Inc.

The basket is a weighted geometric mean relative to the U.S.’s biggest trading partners: the euro, Japanese yen, pound sterling, Canadian dollar, Swedish krona, and Swiss franc. Since the Euro covers the eurozone, its weight in the basket is over 57%.

That’s how economists know if the U.S. dollar has gained value (the index goes up) or lost value (the index goes down). USDX took the helm when the Bretton Woods system collapsed. The Bretton Woods system was the world’s attempt to manage the exchange rate between the world’s leading currencies when the dollar once got too strong...but it just didn’t work out. No hard feelings, guys.