U.S. Dollar Index Futures

Market

As part of the financial sector of commodities futures, U.S. dollar index futures are a measure of the value of the U.S. dollar relative to majority of its most significant trading partners. This index is similar to other trade-weighted indexes, which also use the exchange rates from the same major currencies. As a financial commodities contract, the U.S. Dollar is the most-used currency in international transactions and as other countries’ official currency. Furthermore, the dollar is also one of the world’s reserve currencies. Today, the dollar is the standard unit of currency in many commodity markets, such as gold and oil, all over the world.

History

The U.S. dollar index was originally a geometrically weighted average of ten different currencies, with each currency representing a country that was a major trading partner with the United States. With the introduction of the euro, the USDX index became a geometrically weighted average of six currencies, which represent five major U.S. trading partners and the euro (source: InterContinental Exchange (ICE).

Facts

U.S. dollar index futures can allow traders the opportunity to assess value fluctuation, in relation to other currencies, with one transaction. Traders can also hedge their accounts against risk associated with a fluctuation. For 21 hours a day, U.S. dollar index futures are traded on the ICE. Currency rates are determined by a one base currency quoted in relation to a different currency. Major currencies that are traded are floating. Central bank monetary policies can affect the value of currency. In the U.S., monetary policy is set by the Federal Open Market Committee (FOMC) of the Federal Reserve. U.S. dollar index futures also react to economic data in the nation and globally, as the reports directly impact the strength of the dollar and its relation to other currencies.

Trading

  • U.S. dollar index futures began trading in 1985 on the on the Financial Instruments Exchange, a division of the New York Cotton Exchange, which became the New York Board of Trade (NYBOT). It now trades on the renamed InterContinental Exchange (ICE).
  • USDXY futures are also available in exchange-traded funds (ETFs), options and mutual funds.
  • Dollar index futures are delivered four months in the March/June/September/December quarterly expiration cycle.
  • The DX contract has no price limits.
  • The contract size for U.S. dollar index futures is $1000 x U.S. dollar index with tick size of 0.005 equal to $5.00.

 

Contract Specifications 

Contract SymbolContract UnitPrice Quotation
IDX$1,000 per indexdollars per contract
Trading ExchangeTrading HoursTick Value
ICE20:00 - 17:00 (NY)0.005 = $5

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This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.