01

The US dollar index is an index that comprehensively reflects the exchange rate of the US dollar in the international foreign exchange market. It measures the strength of the US dollar by calculating the comprehensive rate of change of the US dollar and the selected basket of currencies. The analysis of the trend of the US dollar index can indirectly reflect the export competitiveness of the US and the change of the import cost.

02

The appreciation of the U.S. dollar is good for the country’s entire economy, increasing the value of the country’s currency and increasing purchasing power. But there are also impacts on some industries. For example, in the export industry, currency appreciation will increase the price of export commodities, so it has an impact on the export commodities of some companies. If the dollar index falls, the opposite will happen.

03

The main factors affecting the U.S. dollar index: 1. U.S. federal funds rate: In general, when U.S. interest rates fall, the U.S. dollar tends to weaken; when U.S. interest rates rise, U.S. dollar trends are preferred. 2, commodity prices: most of the commodities in the international commodity market are denominated in U.S. dollars, so commodity prices and the U.S. dollar index into a more obvious negative correlation. Select a representative CRB index to overlay with the dollar index to observe the relationship between the dollar index and the commodity price index. 3. Euro exchange rate: The U.S. dollar index is basically a weighted index of a series of exchange rates, so it is ultimately reflected in the strength of the exchange currencies between the United States and its major trading currencies.

04

Historical experience shows that the trend of the dollar index is closely related to the economic cycle. When the US and European economic cycles are in sync, relatively high US domestic interest rates strengthen the dollar. And vice versa. This is closely related to the euro versus the dollar, the largest component of the Dollar Index.