The US Dollar Index or better known as USDX measures the relative strength of Greenback against trading partners (six major currencies) which includes Euro, Yen, Pound, Canadian Dollar, Swiss Franc and Swedish Krona. Using weighted Geometric mean the value of dollar can be calculated and when US dollar gains strength as compared to other foreign currencies US dollar index goes up. The roots of US Dollar Index can be traced back to 1973 at that time it was at 100.000 and over the decade we saw that dollar index reached the peak as high as 164.7200, and as low as 70.698. Consider for example if USDX is at 110.000 it means that Greenbacks experienced a 10% increase in the value for a period of time.
Furthermore, if we look at the value of United States Dollar as compared to last week’s value then we can notice that dollar remained slightly unchanged despite positive US data were released this week. On Tuesday, EUR/USD was trading at 1.0837 and USD remained unchanged against major foreign currencies. Moreover, investors are keenly waiting for the announcement of Interest Rate by the Federal Reserve. At the moment, it is expected that interest rate might be on hold after two day policy meeting is over as last year in the month of December; interest rates were increased after very long period of time.
Lynn Franco, director of The Conference Board Consumer Research Center, remarking at the report said that presently consumers are not anticipating the instability in the financial market that can result in negative impact on the economy. Meanwhile, US dollar went lower against pound sterling, Australian Dollar, and New Zealand Dollar. GBP/USD was up by almost 0.55% to trade at 1.4327, AUD/USD was at 0.6999, and NZD/USD was up by 0.44% to trade at 0.6485. On the other hand, Dollar gained against Swiss Franc to trade at 1.0180. In addition to, we also witnessed that US dollar gained 0.17% against Yen, to trade at 118.50.
Moreover, during this week, as the oil prices per barrel gained some momentum and price went above $30 which resulted in increasing the value of Canadian dollar against greenbacks. Greenbacks faced tough competition from its Canadian counterpart throughout the week to trade at 1.4095.
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