Thursday, October 21, 2010

Beware When People Refer to The US Dollar Index

The US dollar index USDX, or $DXY, is made of:

  • 57.6% Euros
  • 13.6% Japanese Yen
  • 11.9% British Pounds
  • 9.1% Canadian Dollars
  • 4.2% Swedish Krones
  • 3.6% Swiss Francs

When people refer to the US dollar having dropped x% today, it really means little as it may have gone up versus one currency and down versus another. For example, gold went down quite a bit today, but the USD only rose 0.3% versus the Euro:

 Note the very different moves above.

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