The U.S. Dollar Index was created in March 1973 and it is the index of currencies traded the best known and most recognized. It was created with a base of calculation of 100. The U.S. Dollar Index as a benchmark allows evaluating the synthesized value of the U.S. dollar and thus its strength internationally.
The U.S. Dollar Index measures the value of the U.S. dollar against a basket of major currencies. Six major currencies therefore find themselves in the basket against the U.S. dollar with the euro, which represents 57.6%, Canadian Dollar (9.1%), Sterling in the United Kingdom (11.9%), the Swiss Franc (3, 6%), Japanese Yen (13.6%), and finally the Swedish Krona (4.2%).
Together with the U.S. Dollar Index, there are the U.S. Dollar Index contract (symbol = DX), which allows to take advantage of movements in the value of the U.S. dollar against the basket of currencies. This contract is traded on the NYBOT central market and is particularly accessible from certain platforms of Forex brokers.
The importance of interest rates on Forex
Interest rates have a major influence on the Forex and currency pairs.
The level of interest rates, and then the changes that will operate on their level will have a significant impact on the value of the currency and the flow of incoming or outgoing capital of a country.
The interest rates will, in most cases, stimulating the flow of investment from one currency to another currency. Because currencies represent a country’s economy, the interest rate differentials between countries thus affect the other classes of different currencies.