ICE U.S. Dollar Index (USDX)

The ICE U.S. Dollar Index (USDX) is the world’s most heavily traded currency index futures contract. Based on an index created by the U.S. Federal Reserve system in 1973, the USDX is comprised of six trade-weighted international currencies: the Euro, Japanese Yen, British Pound, Canadian Dollar, Swedish Krona and Swiss Franc. The USDX began trading as a futures contract in 1985 and now trades exclusively on the ICE platform, 22 hours a day.

In December, USDX futures established a monthly volume record of more than 500,000 contracts, including a daily record of 74,562 contracts — more than $5.6 billion in notional value — on December 9. With strong volume, deep liquidity and rising open interest, USDX futures are the most efficient way for hedgers or traders to take a view on the direction of the U.S. Dollar.

Unlike standard currency pairs, trading USDX futures does not require a trader to take a position in an additional currency. A hedger who believes the dollar will decline can short USDX futures without considering any specific currency it may depreciate against: as an index, the USDX incorporates the world’s major currencies.

Along with the strength of a benchmark, the use of leverage in the futures market means traders are required to post only 3% to 5% margin for an approximately $75,000 - $80,0000 notional contract (at current USDX price levels). In addition, futures transactions may offer favorable tax treatment compared to ETF’s.

As the leading global benchmark for the international value of the U.S. dollar, the ICE U.S. Dollar Index (USDX) is a staple of media coverage of currency markets. However, the figure often quoted in media reports — the cash index — does not actually trade, but is, instead, a number calculated by Reuters based on the underlying values of the weights and values of the six currencies that comprise the index. Compared to a the calculated cash index, USDX futures offer a market-based assessment about the direction of the dollar —through the USDX price, as well as bid/offer spreads, contract volumes and open interest.

Additional information on USDX futures — including the availability of real-time prices at no cost — is available at the ICE U.S. Dollar Index Home Page.