# U.S. Dollar Index

The U.S. Dollar Index (USDX, DXY, DX, or, informally, the "Dixie") is an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies, often referred to as a basket of U.S. trade partners' currencies. The Index goes up when the U.S. dollar gains "strength" (value) when compared to other currencies.
The index is designed, maintained, and published by ICE (Intercontinental Exchange, Inc.), with the name "U.S. Dollar Index" a registered trademark.
It is a weighted geometric mean of the dollar's value relative to following select currencies:
* Euro (EUR), 57.6% weight
* Japanese yen (JPY), 13.6% weight
* Pound sterling (GBP), 11.9% weight
* Canadian dollar (CAD), 9.1% weight
* Swedish krona (SEK), 4.2% weight
* Swiss franc (CHF), 3.6% weight

## History

USDX started in March 1973, soon after the dismantling of the Bretton Woods system. At its start, the value of the U.S. Dollar Index was 100.000. It has since traded as high as 164.720 in February 1985, and as low as 70.698 on March 16, 2008.
The make up of the "basket" has been altered only once, when several European currencies were subsumed by the euro at the start of 1999. Some commentators have said that the make up of the "basket" is overdue for revision as China, Mexico, South Korea and Brazil are major trading partners presently which are not part of the index whereas Sweden and Switzerland are continuing as part of the index.
| Year (last business day) | DXY close | Factors |
| 1967 | 121.79 | Gold standard kept dollar at $35/oz. |
| 1968 | 121.96 | Consumer price index (CPI) begins to break out. |
| 1969 | 121.74 | Dollar hit 123.82 on 9/30. |
| 1970 | 120.64 | Recession of 1969-1970 ends. |
| 1971 | 111.21 | President Richard Nixon announces the closing of the gold window and the institution of wage-price controls. |
| 1972 | 110.14 | Beginning of stagflation in response to the Nixon shock. |
| 1973 | 102.39 | Gold standard ended; 1973 oil crisis takes place. Index created in March. |
| 1974 | 97.29 | Nixon resigns as a result of the Watergate scandal; Gerald Ford becomes president. |
| 1975 | 103.51 | Interest rate lowered. |
| 1976 | 104.56 | Jimmy Carter elected president. 1976 sterling crisis |
| 1977 | 96.44 | Effective Federal Funds Rate goes below 5%. |
| 1978 | 86.50 | Fed raised rate to 20% to stop inflation. |
| 1979 | 85.82 | 1979 oil crisis takes place. |
| 1980 | 90.39 | Ronald Reagan elected president after a recession began during Carter's last year as president. |
| 1981 | 104.69 | Economic Recovery Tax Act of 1981 passed by Congress; signed into law by President Reagan in August 1981. |
| 1982 | 117.91 | Recession ended. |
| 1983 | 131.79 | Emergency increases in taxes and defense spending are put into place; this was caused by the Tax Equity and Fiscal Responsibility Act of 1982. |
| 1984 | 151.47 | Fed funds rate crosses over 11%. |
| 1985 | 123.55 | Record of 163.83 on March 5; Plaza Accord |
| 1986 | 104.24 | Consolidated Omnibus Budget Reconciliation Act of 1985 and Tax Reform Act of 1986 signed into law by President Reagan; Internal Revenue Code enacted. Start of the Savings and loan crisis. |
| 1987 | 85.66 | Black Monday. |
| 1988 | 92.29 | Fed raised rates; Omnibus Foreign Trade and Competitiveness Act passed; George H. W. Bush elected president. |
| 1989 | 93.93 | Yield curve inverts as the federal reserve does not respond significantly to economic malaise. Black Friday. |
| 1990 | 83.89 | Early 1990s recession begins; Omnibus Budget Reconciliation Act of 1990 passed. |
| 1991 | 84.69 | Persian Gulf War takes places during the second year of the recession. |
| 1992 | 93.87 | NAFTA approved by H. W. Bush; Bill Clinton elected president. |
| 1993 | 97.63 | Balanced Budget Act and Omnibus Budget Reconciliation Act of 1993 both passed. |
| 1994 | 88.69 | Marrakesh Agreement signed; United States becomes a founding member of the World Trade Organization. |
| 1995 | 84.83 | Fed raised rate slightly from 5.45 to 5.6 as concerns of inflation from an economic boom grew. The Bosnian War ends. |
| 1996 | 87.86 | Fed funds rate falls slightly from 5.6 to 5.29 as inflation concerns are abated. Unemployment rate falls slightly from 5.6 to 5.4. Bill Clinton is reelected by a large margin during an economic boom and international stability from a unipolar world order. The bipartisan Personal Responsibility and Work Opportunity Act reduces government spending on welfare. |
| 1997 | 99.57 | 1997 Asian financial crisis; LTCM reform approved. |
| 1998 | 93.95 | 1998 Russian financial crisis; Clinton impeached by House of Representatives. The treasury enters a period of budget surplus. |
| 1999 | 101.42 | Clinton acquitted by the Senate; Gramm–Leach–Bliley Act passed. |
| 2000 | 109.13 | Treasury budget surplus peaks. Dot-com bubble collapses; George W. Bush elected President after a Supreme Court battle over the election recount in Florida. |
| 2001 | 117.21 | Recession took place from March–November 2001; Economic Growth and Tax Relief Reconciliation Act of 2001 passed; dollar rose to 118.54 on 12/24 after the September 11 attacks. |
| 2002 | 102.26 | Euro launched as a hard currency at $.90. |
| 2003 | 87.38 | United States invasion of Iraq; Jobs and Growth Tax Relief Reconciliation Act of 2003 passed. |
| 2004 | 81.00 | American Jobs Creation Act of 2004 passed. |
| 2005 | 90.96 | War on Terror doubled debt; dollar weakened; Hurricane Katrina affects Louisiana. |
| 2006 | 83.43 | Tax Relief and Health Care Act of 2006 passed. |
| 2007 | 76.70 | Euro rose to $1.47; Great Recession began in December 2007. |
| 2008 | 82.15 | Record low of 71.30 on 3/17; Economic Stimulus Act of 2008 passed; Public Law 110-343 goes into effect in October 2008; Barack Obama elected president. |
| 2009 | 77.92 | American Recovery and Reinvestment Act of 2009 passed; ECB lowered rates; first period of quantitative easing (QE1) begins; 2009 flu pandemic begins in Mexico (pandemic ended in August 2010). |
| 2010 | 78.96 | Second period of quantitative easing (QE2) begins; Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 passed; beginning of Arab Spring in November 2010 |
| 2011 | 80.21 | Syrian civil war and Libyan Crisis begin; Osama bin Laden killed; Operation Twist initiated; European sovereign debt crisis begins; Budget Control Act of 2011 passed. |
| 2012 | 79.77 | Third period of quantitative easing (QE3) begins; Hurricane Sandy affects the northeastern states; American Taxpayer Relief Act of 2012 passed. |
| 2013 | 80.04 | United States budget sequestration in 2013 necessary to address the United States fiscal cliff; 2013 United States government shutdown occurs; West Africa Ebola virus epidemic begins. |
| 2014 | 90.28 | 2010s oil glut; Euromaidan crisis in Ukraine; Greek debt crisis reaches its midpoint. |
| 2015 | 98.69 | Fed raised rates; European migrant crisis accelerates; Donald Trump announces his candidacy for President. |
| 2016 | 102.21 | 2016 Brexit referendum takes place in the United Kingdom; Donald Trump elected president. |
| 2017 | 92.12 | EU strengthened; Hurricane Harvey affects Texas, Louisiana, and Arkansas; Tax Cuts and Jobs Act of 2017 passed. |
| 2018 | 96.17 | First Trump tariffs began to be imposed; First North Korean–US summit takes place; Hurricane Florence affects North Carolina, South Carolina, and Virginia; Hurricane Michael affects Florida, Alabama, and Georgia; Alexandria Ocasio-Cortez and several other progressive Democratic candidates elected in the midterm elections; 2018–2019 United States federal government shutdown occurs. |
| 2019 | 96.54 | Trump seen on North Korean soil; Lebanese liquidity crisis begins; Fed begins acting as role in investor to provide funds in the repo markets; Abu Bakr al-Baghdadi killed on October 27; first case of COVID-19 discovered in China; Trump impeached by House of Representatives on December 18. |
| 2020 | 93.27 | Qasem Soleimani killed on January 3; Trump acquitted of impeachment on February 11; COVID-19 declared a pandemic by the World Health Organization on March 11; George Floyd protests begin on May 31. |
| 2021 | 89.21 | First dip below 90 since 2018; Increased pandemic stimulus payment prospects after Democrats take Senate control in the Georgia runoff election. |
| 2022 | 110.05 | Fed raised rates; increased pandemic by Omicron Variant and the imminent end of the pandemic. Also Russian invasion of Ukraine and energy crisis. |
| 2023 | 101.33 | Fed holds rates at 5.33 as YoY core inflation is reduced to below 4% and unemployment remains historically low at below 4%. Continuing China-United States trade war and government spending from the Build Back Better Plan impact economic growth and inflation. Concerns on middle east stability with the start of the Israel-Hamas war impact energy prices while the US became the largest producer of crude oil of any nation in history. |
| 2024 | 108.49 | Escalating geopolitical conflict in the middle east, Fed cuts rates, Trump is elected to second non-consecutive term |

## Relation to Economic Growth in Developing Countries

Some scholars posit that the cyclical fluctuations in the Dollar Index, commonly referred to as the Dollar Cycle, are intricately linked to economic growth trends in developing nations. According to this hypothesis, a period of appreciation in the dollar, known as a dollar upcycle, tends to correlate with a decline in economic growth in emerging markets. Conversely, a period of depreciation, or a dollar downcycle, is associated with an increase in growth within these economies. The value of the U.S. dollar also correlates with global interest rates, particularly affecting borrowing costs for developing nations. When the USD depreciates, borrowing becomes cheaper and foreign investment increases. Conversely, USD appreciation raises interest rates, making borrowing more expensive and reducing the flow of foreign direct investment to these countries. Because most commodities are traded in U.S. dollars globally, a drop in the dollar's value often results in higher commodity prices in the local currencies of developing countries. This increase in prices can enhance local income and consumption, leading to economic growth. On the other hand, when the USD strengthens, commodity prices generally decline, which can hinder growth in these regions. Consequently, the economic development cycle in developing nations is closely linked to the cycle of commodity prices, which is driven by fluctuations in the USD.

## Trade-weighted USD Index

The trade-weighted US dollar index is a currency index created by the Federal Reserve to measure the exchange rate of the United States dollar compared to the nations that it trades with the most, the more trade a country has with the United States the more that exchange rate weighs on the index. The index was created in 1998 during the creation of the Euro.

## Quotes

ICE provides live feeds for Dow Futures that appear on Bloomberg.com and CNN Money. USDX is updated whenever U.S. Dollar markets are open, which is from Sunday evening New York City local time (early Monday morning Asia time) for 24 hours a day to late Friday afternoon New York City local time.

## Calculation

The U.S. Dollar Index is calculated with this formula: USDX = 50.14348112 × EURUSD$^{−0.576}$ × USDJPY$^{0.136}$ × GBPUSD$^{−0.119}$ × USDCAD$^{0.091}$ × USDSEK$^{0.042}$ × USDCHF$^{0.036}$

## Trading

US Dollar Index futures are traded for 21 hours a day on the ICE platform with futures having a March/June/September/December quarterly expiration cycle. The futures are physically settled and can be redeemed for the underlying currencies the third Wednesday after expiration. It is also available indirectly in exchange-traded funds (ETFs), options, contracts for difference and mutual funds.