There is also another kind of dollar index used by the Federal Reserve. It is called the "trade-weighted U.S. dollar index".
The Fed wanted to create an index that could more accurately reflect the dollar's value against foreign currencies based on how competitive U.S. goods are compared to goods from other countries. It was formed in 1998 in order to keep up-to-date with U.S. trade.
Currencies and Weights
Here is the current weighting (in percentage) of the index:
| Country | Weight(%) |
|---|---|
| Euro zone | 17.66 |
| China | 17.33 |
| Canada | 15.22 |
| Mexico | 9.72 |
| Japan | 8.71 |
| United Kingdom | 4.32 |
| Korea | 3.50 |
| Taiwan | 2.37 |
| Singapore | 2.02 |
| Brazil | 1.95 |
| Malaysia | 1.87 |
| Hong Kong | 1.75 |
| India | 1.61 |
| Switzerland | 1.42 |
| Thailand | 1.40 |
| Australia | 1.20 |
| Russia | 1.17 |
| Israel | 1.12 |
| Sweden | 1.00 |
| Indonesia | 0.92 |
| Saudi Arabia | 0.82 |
| Chile | 0.82 |
| Philippines | 0.65 |
| Colombia | 0.50 |
| Argentina | 0.48 |
| Venezuela | 0.47 |
| Total | 100 |
*Weights as of May 2009
The main difference between the USDX and the trade-weighted dollar index is the basket of currencies used and their relative weights.
The trade weighted index includes countries from all over the world, including some developing countries. Given how global trade is developing, this index is probably a better reflection of the dollar's value across the globe.
The weights are based on annual trade data.
Weights for the broad index can be found at http://www.federalreserve.gov/releases/H10/Weights.
If you'd like to see historical data, check out http://www.federalreserve.gov/releases/h10/Summary/.
(See more) Using the USDX for Forex
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