US Dollar Index Futures with Emmett Trades
For stock traders, trading indices is a cost-effective way to gain exposure to many different companies in one single transaction. Similarly, the US Dollar Index acts as a benchmark to currency traders. The index measures the value of the US Dollar relative to a basket of foreign currencies.
In other words, the US Dollar index assesses the USD’s global strength in relation to other currencies. Given that USD is the most traded currency, the index is a good representation of the direction of the Dollar. Rather than analysing a single currency pair, the index enables market participants to monitor its movement and hedge their position against a rising or falling Dollar.

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Components of US Dollar Index
The index consists of 6 foreign currencies which comprises of 24 countries with 19 countries being the members of the European Union.

 
Many countries operate under a floating exchange rate regime and therefore they are highly influenced by the central bank monetary policies such as interest rate decisions, current account balance or other economic and political factors affecting the currencies.

Source: Emmett Trades MT4

Two weeks ago, the index plummeted after the disappointing retail sales data (Actual figures -0.1% and the forecasted figures was 0.2%) but recovered after a few hours following the 25bp interest rate hike. While the hike was expected, the US Dollar recovered as traders are now anticipating one more hike in the next Fed meeting which will be held on 25-26 July.
Emmett Trades offer a quarterly contract on the Dollar Index (USDOLLAR) and the next rollover will be in September. This market is available with Emmett Trades on a 1% margin requirement. The minimum trade size is 0.1 and maximum is 100 contracts. The units of trading for 1 contract size is USD1000*Index Value. There are no overnight interests and swap charges for the USD Index with Emmett Trades.

By: Deepta Bolaky
Emmett Trades

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