U.S. Dollar Index

What is the U.S. Dollar Index (DXY)?

The U.S. Dollar Index (DXY) is composed of six major currencies: Euro (EUR), Japanese Yen (JPY), British Pound (GBP), Canadian Dollar (CAD), Swedish Krona (SEK), and Swiss Franc (CHF).

When the dollar index rises, it indicates that the U.S. dollar is appreciating relative to these currencies.

When it falls, it indicates depreciation.

The dollar index functions like a thermometer, showing the “heat” and influence of the U.S. dollar in global markets. The U.S. dollar is the world’s most widely circulated currency, and many goods and services are priced and settled in USD. Changes in the dollar index can directly impact investment returns and risk.

Functions and Features of U.S. Dollar Index Futures

Dollar index futures allow investors to participate in movements of the U.S. dollar, making them an essential tool for expressing views on overall dollar strength. Key features include:

1. Global Hedging and Macro Tools

In times of market risk or expectations of dollar appreciation, dollar index futures serve as a primary instrument for hedging and asset reallocation. They quickly reflect the overall strength of the dollar.

2. Indicator of Interest Rate and Policy Expectations

U.S. Federal Reserve rate hikes, cuts, or quantitative tightening directly affect the dollar’s value. Futures markets often price in these expectations ahead of time, making dollar index futures a gauge of monetary policy sentiment.

3. Leverage and Hedging Advantages

By posting a relatively small margin, investors can participate in overall dollar movements without trading multiple currency pairs individually. This allows efficient hedging of FX exposure.

4. Negative Correlation with Commodities, Stocks, and Bonds

A stronger dollar usually pressures commodities (such as gold and crude oil), negatively affects U.S. exporters, and exerts capital pressure on emerging market assets. Investors can use dollar index futures to manage these risks or integrate into trading strategies.

Exchanges

• ICE U.S. (Intercontinental Exchange)
• ICE Singapore (ICE SG)

Key Factors Affecting U.S. Dollar Index Futures (DX)

1. Federal Reserve Policy and Interest Rate Expectations

The dollar index is closely tied to U.S. interest rate policy. Signals of rate hikes, balance sheet reductions, or other tightening measures usually strengthen the dollar, pushing dollar index futures higher.

2. Inflation and Economic Data

U.S. inflation (CPI, PCE), GDP growth, and unemployment data directly affect market expectations of the dollar and the U.S. economy, influencing the DXY trend.

3. Euro and Other Currency Policy Directions

The euro accounts for about 58% of the dollar index. ECB policy and European economic conditions have a strong impact on the dollar index. A weak European economy or euro depreciation typically boosts the dollar index.

4. Global Geopolitical and Risk Sentiment Changes

Events like wars, political crises, or systemic risks often drive global capital into dollar-denominated safe assets, raising the dollar index. Conversely, when market sentiment is stable, funds may flow into riskier assets, reducing dollar demand.

5. Commodity Markets and Cross-Asset Flows

The dollar has a clear inverse relationship with commodities like gold and crude oil. A strong dollar usually suppresses commodity prices, while a weak dollar tends to lift them, making dollar index futures a useful reference for commodity trading.

U.S. Dollar Index Margin

How much money is needed to trade futures? At the beginning, the required margin is the initial margin. While holding a position, the margin after deducting floating profits and losses must remain above the maintenance margin; otherwise, a margin call will be issued. For day-trading margin, only half of the margin is required, provided the position is closed before the market closes.

Foreign Futures

U.S. Dollar Index Contract Specifications

Here is a summary for traders of the contract specifications, exchange, trading hours, minimum price fluctuation, and available trading months for U.S. Dollar IndexFutures, Mini US Dollar Index FuturesFutures.

U.S. Dollar IndexLast Trading Day

Futures