1) The dollar index is meant to be used as a measure of the value for the dollar as a currency. Because currency trades require two currencies, it is not directly tradable, but some derivative contracts may use it as an underlying instrument. The weightings of the currencies used to calculate the index were based on United States' biggest trading partners in the 1970s. It does not include China, emerging markets, or commodity currencies. Therefore, the index may be less useful as an economic measure than in previous decades.
2) When a currency is strong, domestic businesses generate less profit from their exports. With a higher dollar index, companies heavily reliant on foreign sales tend to report lower earnings. Lower earnings usually means lower stock prices. But the dollar index might not tell the whole story because it is heavily weighted against European currencies and the Japanese Yen.
Investment advice offered through Magnifina, LLC, a Registered Investment Adviser. SEC# 801-117932. This website and information are provided for guidance and information purposes only and are not intended to provide investment, tax, or legal advice. No historical or future performance claims are made. Please consult a qualified professional before making decisions about your financial situation or otherwise using any specific information contained herein.
Any linked materials are provided strictly as a courtesy. We make no representation as to the completeness or accuracy of information provided at these websites. When you access one of these websites, you are leaving our website and assume total responsibility and risk for your use of the websites you are viewing.
Any service described as “free” or “complimentary” means there is no monetary or financial cost to you. However, these offers may require you to be in contact with us, provide certain information, or participate in meetings or consultations. We reserve the right to deny, discontinue, or limit access to any offer at our sole discretion.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
25 Broadway, 10th Floor
New York, NY 10004
Phone: (800) 732-0818