The U.S. dollar index (USDX) is defined as a measure of the worth of the U.S. dollar relative to the worth of a basket of currencies of the bulk of the U.S.’s most vital trading partners. This index is analogous to other trade-weighted indexes, which also use the exchange rates from an equivalent major currencies.
The US Dollar Index is employed to live the worth of the dollar against a basket of six world currencies – Euro, Swiss franc, Japanese Yen, Canadian dollar , British pound , and Swedish krona .
The index was established shortly after the Bretton Woods Agreement dissolved in 1973 with a base of 100, and values since then are relative to the present base.
The value of the index is fair indication of the dollar’s value in global markets.
The index is currently calculated by factoring within the exchange rates of six major world currencies, which include the Euro (EUR), Japanese yen (JPY), Canadian dollar (CAD), British pound (GBP), Swedish krona (SEK), and Swiss franc (CHF). The EURO is, by far, the most important component of the index, making up almost 58 percent (officially 57.6%) of the basket. The weights of the remainder of the currencies within the index are: JPY (13.6%), GBP (11.9%), CAD (9.1%), SEK (4.2%), and CHF (3.6%).