The U.S.

dollar Index
The Federal Reserve Board introduced the U.S.dollar index in march 2003.The index was the result of the Smithsonian agreement, which repeated the Bretton Woods Agreement. What does that mean? The Bretton Woods agreement fixed global currency rates 25 years earlier. The smithsobian agreement, which was viewed as a victory for proponents of free markets, enbabled global currencies to float based on market forces. The U.S.dollar index is used by traders to get the big picture of the overall trend of the dollar and is widely quoted in the press and on quote services. It is similar to the Feds dollar index, which is a trade weighted index, meaning that the Fed gives value to each individual currency in the index based on how much it trades within the United States. However, the value of each index is different, and they shouldnt be confused with one another. The U.S. dollar index has traded as high as the 160s and as low as the 70s, with the Traders Index making a new low in early 2008, shown in Figure11-4. The U.S. dollar index trades on the Chicago Mercantile Exchange. Here are the particulars of the index: A minimum tick is 0.004 and is worth $5. Futures contracts expire in March, june , September, and December. The overall value of a contract is 1,000 times the value of the index in dollars. Delivery is physical meaning that you receive dollars based on the value of the index on the second business day prior to the third Wednesday during the month of the expiring contract. On the last trading day, trading ceases at 10:16 am. Delivery day is the third Wednesday of the contract month. No trading limits are placed on the U.S. dollar index. Trading hours are from 8:05 am to 3:00pm, with overnight trading from 7 to 10 p.m. The U.S. dollar index was modified at the inception of the euro and is weighted in a way thats similar to the Feds Trade weighted index, as follows (expressed in percentages) Euros weight : 57.6 percent Japanese yen: 13.6 percent British pound: 11.95 percent Canadian dollar: 9.1 percent Swedish krona: 4.2 percent Swiss fromc: 3.6 percent