Posted: 03 Sep 2009 12:28 AM PDT
Forex signals and technical analysis can be affected by the news report (fundamental)
EUR/USD Actual Analysis At 03.09.2009
The cross has been very volatile lately, and recorded much bullishness yesterday. Much of today's oscillators seem to be misleading. However, both the 4-hour and weekly charts offer a more accurate picture. The 4-hour chart's Stochastic Slow shows that the pair is floating in the overbought territory, and a downward correction is imminent. The MACD also supports the view that the pair is overbought. Going short with tight stops may turn out to pay off today.
Dangerous High ( Stop Buy Here ) = 1.4412
Maximum Up Trend = 1.4354
Reversal High = 1.4317
Middle Line ( Pivot ) 1.4247
Reversal Low= 1.4186
Maximum Down Trend = 1.4140
Dangerous Low ( Stop Sell Here ) = 1.4096
Yesterday High : 1.4291
Yesterday Low : 1.4189
Price Move = EURUSD Goes To High Market / Blue Area
4 Hours Current Trend =UP TREND ( WEAK )
Daily Current Trend =UP TREND ( WEAK )
Saturday, September 5, 2009
U.S. Economy: Payroll Losses Slow, Unemployment Rate Climbs
U.S. Economy: Payroll Losses Slow, Unemployment Rate Climbs
By Timothy R. Homan
Sept. 4 (Bloomberg) -- The pace of U.S. job losses slowed in August while the unemployment rate reached a 26-year high, signaling the recovery from recession will be slow to develop.
Employers cut payrolls by 216,000, fewer than forecast, after a 276,000 drop in July, Labor Department data showed today in Washington. The jobless raterose to 9.7 percent; the so- called underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking -- reached a record 16.8 percent.
Today’s figures stoke concern that the recovery forecast to take hold in the second half of the year won’t prompt a turnaround in the job market until 2010. With the ranks of long- term unemployed nearing 5 million, workers are at risk of losing skills, making it even tougher for them to eventually find work.
“The economy is no longer detonating, but we are still losing jobs,” David Rosenberg, chief economist at Gluskin Sheff & Associates Inc. in Toronto, said in an interview with Bloomberg Radio. “It’s going to be a very tough environment for the consumer.”
Stocks fluctuated after the release, and the Standard & Poor’s 500 Index was up 0.3 percent at 1,005.99 as of 11:23 a.m. in New York. Treasuries were lower, with benchmark 10-year notes yielding 3.38 percent from 3.35 percent late yesterday.
Rising joblessness underscores Treasury Secretary Timothy Geithner’sjudgment this week that it’s “too early” to start exiting from the unprecedented stimulus measures aimed at stabilizing the economy.
Lowering Costs
AMR Corp. and Whirlpool Corp. are among the companies continuing to cut staff to lower costs and revive profits in the aftermath of the deepest recession since the 1930s.
“The labor market lags behind the rest of the economy, so we are first going to have to see positive GDP growth,” Christina Romer, chairman of the White House Council of Economic Advisers, said in a Bloomberg Radio interview. While 9.7 percent unemployment is “a tragedy,” Romer noted that the pace of job losses has slowed from 741,000 in January.
Romer said the Obama administration’s $787 billion fiscal stimulus is working to boost growth and declined to comment on whether a second effort will be needed.
Revisions subtracted 49,000 from payroll figures previously reported for July and June. The drop for July is now calculated at 276,000, compared with the 247,000 previously reported.
Payrolls were forecast to fall 230,000 in August according to the median of 79 economists surveyed by Bloomberg News. The jobless rate was projected to rise to 9.5 percent. Analysts in a monthly Bloomberg survey projected the jobless rate will reach 10 percent by early 2010 and average 9.8 percent next year.
Recession’s Toll
The latest numbers brought total jobs lost since the recession began in December 2007 to 6.9 million, the biggest decline in any post-World War II economic slump.
Among the 14.9 million unemployed Americans in August, 4.99 million were out of work for more than 26 weeks. The percentage of jobless who weren’tclassified as on temporary layoff rose to 53.9 percent, up from 39.1 percent a year ago.
“Layoffs that we’re having are more structural and not cyclical, and that makes it more difficult to have a meaningful rebound in income growth, which is a key ingredient as I said for sustainable self re-enforcing expansion,” said Tony Crescenzi, a market strategist and portfolio manager at Pacific Investment Management Co., manager of the world’s biggest bond fund.
Breadth of Declines
All major job categories recorded losses in August, with construction payrolls tumbling 65,000, factories cutting another 63,000 and retailers firing 10,000 people.
Whirlpool, the world’s largest appliance maker, is among those firms still eliminating positions. The Benton Harbor, Michigan-based company said Aug. 28 it will close its Evansville, Indiana, manufacturing plant, resulting in the elimination of 1,100 jobs.
Fort Worth, Texas-based American Airlines, a unit of AMR, said this week it will furlough 228 flight attendants and put 244 more on involuntary leave.
Federal Reserve officials had “particular” concern about the job market when they met Aug. 11-12, minutes of the gathering showed this week.
“Long-term unemployment and permanent separations continued to rise, suggesting possible problems of skill loss and a need for labor reallocation that could slow recovery in employment begins to expand,” the Fed said in the minutes released Sept. 2.
Fed Rate Changes
Federal Reserve policy makers waited at least a year after unemployment peaked before raising interest rates in the aftermath of the previous two recessions.
Chairman Ben S. Bernanke, credited with preventing a second depression in winning nomination by President Barack Obama for a second term last month, has overseen a $1.2 trillion expansion of the central bank’s balance sheet to combat the credit crisis.
Today’s report also showed the average work week held at 33.1 hours in August. Average weekly hours worked by production workers remained unchanged from the month before, at 39.8 hours, while overtime also held at 2.9 hours. That brought the average weekly earnings up to $617.32 from $615.33.
“We’re still going to see some months of job cuts,” said Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts. “There is a whole range of options, like adding shifts or hours, that companies can put in place until it becomes necessary to hire people back.”
Workers’ average hourly wages rose 6 cents, or 0.3 percent, to $18.65 from the prior month. Hourly earnings were 2.6 percent higher than August 2008. Economists surveyed by Bloomberg had forecast a 0.1 percent increase from the prior month and a 2.2 percent gain for the 12-month period.
The U.S. recession “is bottoming out” and the economy is poised for “a slow return,” Alcoa Inc. Chief Executive Officer Klaus Kleinfeld said in a Sept. 2 interview. The head of the largest U.S. aluminum producer said government stimulus in the U.S. and China will affect the New York-based company’s earnings “positively” this year.
To contact the reporter on this story: Timothy R. Homan in Washington atthoman1@bloomberg.net
Last Updated: September 4, 2009 11:25 EDT
EURUSD: Reverses Declines, Keeps Eyes On The Upside
by Mohammed Isah (FXTechstrategy) | Fri, Sep 4 2009, 12:24 GMT
HIGHLIGHTS: GBPUSD: Recovering Higher Off Recent Low - Having backed off lower level prices at 1.6112 to close higher on Tuesday, GBP was seen following through higher in early trading today. EURUSD: Reverses Declines, Keeps Eyes On The Upside - As declines halted at 1.4272 and a higher close was seen on Tuesday, early morning strength today now looks to push the pair further higher towards the 1.4376 level where its Sept 01’09 high is located. GBPUSD GBPUSD: Still Looking To Recover Higher
Forex: Euro breaks above 1.4260 on recovery path
Fri, Sep 4 2009, 16:06 GMT
FXstreet.com (Barcelona) – Euro has recovered almost all of losses on the back of unemployment report against the Greenback and, after bouncing at 1.4195, EUR/USD has risen around 90 pips to trade above 1.4200 again, break 1.4260, MA55 in the hourly chart, and test 1.4282 level, MA200 in the hourly chart.
Currently, EUR/USD is trading around 1.4270/80, 0.35% below today's opening price action at 1.4258.
Currently, EUR/USD is trading around 1.4270/80, 0.35% below today's opening price action at 1.4258.
EUR/USD (Sep 04 at 16:33 GMT)
1.4309/10 (0.35%)
H 1.4327 L 1.4189
| S3 | S2 | S1 | R1 | R2 | R3 |
| 1.4218 | 1.4254 | 1.4290 | 1.4316 | 1.4352 | 1.4388 |
| [?]Trend Index | [?]OB/OS Index |
| Slightly Bullish | Neutral |
| Data updated on Sep 04 at 16:30 (15-minute timeframe) | |
razzimaniapips
Friday, September 4, 2009
RAMADHAN 2009
In Muslim nations and regions around the globe, this is the first week of the holy month of Ramadan, a time for followers to abstain from eating, drinking, smoking and sexual activity during the day, breaking their fast each sunset, with traditional meals and sweets. During this time, Muslims are also encouraged to read the entire Quran, to give freely to those in need, and strengthen their ties to God through prayer. The goal of the fast is to teach humility, patience and sacrifice, and to ask forgiveness, practice self-restraint, and pray for guidance in the future. This year, Ramadan will continue until Saturday, September 19th.
Officers of Malaysia's Islamic authority use a telescope to perform "rukyah", the sighting of the new moon of Ramadan, in Teluk Kemang, south of Kuala Lumpur, Malaysia on August 20, 2009. Muslims scan the sky at dusk in the beginning of the lunar calendar's ninth month in search of the new moon to proclaim the start of Ramadan, Islam's holiest month during which observant believers fast from dawn to dusk. (REUTERS/Bazuki Muhammad)
Officers of Malaysia's Islamic authority use a telescope to perform "rukyah", the sighting of the new moon of Ramadan, in Teluk Kemang, south of Kuala Lumpur, Malaysia on August 20, 2009. Muslims scan the sky at dusk in the beginning of the lunar calendar's ninth month in search of the new moon to proclaim the start of Ramadan, Islam's holiest month during which observant believers fast from dawn to dusk. (REUTERS/Bazuki Muhammad)
sikap seorang jutawan
Berdasarkan laporan kekayaan penduduk dunia yang dikeluarkan oleh Merrill Lynch dan firma perunding Capgemini, terdapat 9.5 juta orang jutawan ( memiliki harta bernilai lebih USD 1juta ) di seluruh dunia pada tahun 2006
Pada tahun tersebut Singapura,India dan Indonesia,mencatatkan pertumbuhan paling tinggi bilangan penduduk yang berjaya mencapai status jutawan. Pada tahun 2007 pula, dianggarkan trdapat 415 orang yang bertaraf bilionair di Amerika Syarikat, 101 orang di Rusia dan 60 orang di Jerman.
Menjadi jutawan ialah idaman semua orang , Namun demikian , pada tahun 2006 dianggarkan Cuma 6% daripada penduduk dunia berupaya mencapai status tersebut. Soalanya , di manakah perginya baki 94% yang lain itu ? Banyak yang beranggapan bahawa Negara , bangsa, kepandaian dan peluang ialah factor utama, namun kepecayaan tersebut tersasar jauh daripada kebenaran.
Faktor utama yang membezakan mereka ialah corak minda. Jutawan didapati mempunyai cara berfikir yang berbeza daripada golongan biasa. Mereka mempunyai kepercayaan yang berbeza tentang konsep pemilihan kerjay, pasangan, tempat tinggal , penggunaan masa lapang, pendidikan hinggalah knderaan yang dipandu.
Menurut kajian Dr.Thomas J. Stanley, corak minda bukan bermaksud kepandaian IQ yang tinggi , tetapi membawa kepada maksud " berfikir dengan betul ". Fikiran yang betul tentang pemilihan krjaya adalah berasaskan minat dan kebolehan seseorang.
Mereka menjadi jutawan hasil daripada pendapatan kerana melakukan ssuatu yang di minatinya atau menggunakan kemahiran tertentu yang dimiliki.
Dengan memilih kerjaya dalam segmen tersebut, mereka berupaya memberikan perkhidmatan yang lebih baik daripada orang lain.
Oleh sebab itu , mereka dibayar dengan imbuhan yang lebih tinggi brbanding dengan orang lain. Menurut kajian Dr.Stanley, dua pertiga jutawan telah mendefinisikan diri mereka sebagai bekerja sendiri atau usahawan dan bergiat dalam bidang yang membolehkan mereka menjadi penyumbang terbaik.
Namun demikian, memperolh pndapatan yang lumayan sahaja bukanlah syarat mutlak untuk bergelar jutawan. Mereka harus juga mempunyai fikiran yang betul tentang konsep perbelanjaan. Jutawan percaya , pengurusan kewangan bermula dari rumah. Lebih daripada 80% peratus jutawan memilih pasangan hidup yang lebih konservatif tentang kewangan berbanding dengan mereka , disamping mampu menguruskan perbelanjaan keluarga dengan baik.
Dalam memilih pasangan hidup, mreka memahami perbezaan antara seorang pengurus perbelanjaan dengan seorang yang bakal menjadi sumber perbelanjaan dalam ekonomi rumah tangga.
Lebih daripada 90% peratus jutawan terdiri daripada mereka yang sudah berumahtangga dan sebahagian besar mereka pula cuma mempunyai SEORANG ISTERI.
Mereka berkongsi falsafah pengurusan yang sama dengan Tun Daim Zainuddin , bekas Menteri Kewangan Malaysia iaitu " Tingkatkan Pendapatan dari masa ke semasa, namun kekalkan cara hidup lama ".Menurut satu maklum balas, 80% peratus penduduk Malaysia menghabiskan pendapatan bulanan mereka dalam perbelanjaan isi rumah dan terus meningkatkan perbelanjaan tersebut seandainya berlaku peningkatan pada tahap pendapatan bulanan. Cara ini sangat bertentangan dengan kaedah berfikir GOLONGAN JUTAWAN.
Para jutawan juga tidak mahu memasuki zon yang diistilahkan olh mreka sebagai "Fokus Serangan ". Mereka berfikir bahawa adalah bijak untuk terus kekal di kawasan perumahan yang sedia ada , walaupun mereka mampu memiliki rumah yang lebih mewah , di samping mngelakkan diri daripada sasaran jenayah dan memulakan hutang baru perumahan.
Pada masa yang sama , mreka juga mampu menikmati peningkatan nilai rumah yang sdia ada . Di Amerika, leboh daripada 90% peratus jutawan tinggal di rumah milik sendiri dan kebanyakkan daripada mereka tinggal di rumah yang sama sejak 20 tahun lalu ! .
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EUR/USD Fluctuates Between our Trend Lines as Inflection Approaches
EUR/USD Fluctuates Between our Trend Lines as Inflection Approaches
Posted on September 3, 2009.
The EUR/USD posted a solid recovery yesterday, exhibiting more strength than we expected considering Thursday’s economic data was nothing to cheer about. Furthermore, the S&P futures hung beneath 1000, providing little motive to devalue the Dollar. Investors may have been reacting to the breakout in gold since the Dollar has been negatively correlated with the Greenback.
Gold surged to $980/oz and was the talk of the town. Therefore, investors may have taken gold’s ascent as a hint that the Dollar should head lower. On the other hand, investors may have been comfortable keeping the EUR/USD afloat since the S&P’s recent contraction was mostly influenced by psychological factors. Either way, the FX markets have been difficult to track lately with the major Dollar crosses sending mixed signals. This tells us the Dollar may be approaching a turning point as investors grow anxious and jockey for position.
Meanwhile, the EUR/USD has returned earlier gains and is trading smack in the middle of our trend lines after U.S. weekly Unemployment Claims came in slightly above analyst expectations. America’s much anticipated ISM Services PMI data printed in line with estimates, only making the present picture muddier. We have yet to receive the market moving headlines we were anticipating. The ECB kept its benchmark rate at 1% while Trichet remained cautiously optimistic as anticipated. EU data has impressed on all fronts lately, including this week’s Flash CPI.
Therefore, the ECB had little reason to act other than to deliver a monetary shock. Due to the Euro’s resounding positive data, we anticipate the EUR/GBP could find bottom sometime soon as investors continue to snap up an oversold Pound. It’s the EU’s turn to take a break from economic data next week, so British data will need to present a strong case to gain back its relative strength. EU data is finished for the week, so the focus will turn to the G20 meetings and key employment data from the U.S. tomorrow.
Despite present indecisiveness in the EUR/USD, all three tiers of our trend lines are coming together beautifully with multiple inflection points on the horizon. The behavior of our trend lines indicates a turning point may finally be approaching. We’ve witnessed counterbalancing buy-side and sell-side volume with the currency pair experiencing lower highs and higher lows (9/01 excluded). Hence, the next near-term leg is hanging in the balance, though there remains a certain downward tendency in the currency pair due to recent weakness in the S&P.
As the summer winds down, we anticipate volume and volatility could return once again. The G20 meetings have been flying in under the radar and start up tomorrow. A potential market mover tomorrow could be a surprise in U.S. unemployment data. However, we believe the G20 meetings could be the wild card. We wouldn’t be surprised to see the topic of a new monetary standard return in a big way since volatility in the FX markets has abated. China may take the G20 meeting as an opportunity to breach the topic on a larger stage. Such a move could provide the jolt of volatility the EUR/USD’s inflection points are indicating. On the other hand, the EUR/USD may just opt to continue its erratic consolidation.
Technically speaking, our 3rd tier uptrend and downtrend lines play the largest trend-setting role on our chart. If our 3rd tier downtrend line fails, we anticipate a retest of August highs. On the flipside, a retracement below our 3rd tier uptrend line could result in a retest of August lows.
Meanwhile, the 1.40 and 1.45 psychological patiently wait in opposite directions. Investors should keep a close eye on the S&P futures. If the S&P futures should continue their downward momentum and head below technical supports the EUR/USD would likely exercise its positive correlation with U.S. equities.
Present Price: 1.4287
Resistances: 1.4300, 1.4309, 1.4327, 1.4347, 1.4366
Supports: 1.4276, 1.4261, 1.4251, 1.4224, 1.4208
Psychological: 1.40, 1.45
Analysis by FastBrokers
This post was written by:
Interactive Brokers - who has written 7 posts on Forex District.
Interactive Brokers Group, Inc.'s founding member has completed its 32nd year as a Broker Dealer. In its broker dealer agency business, IB provides direct access ("on line") trade execution and clearing services to institutional and professional traders for a wide variety of electronically traded products including stocks, options, futures, forex, bonds and funds worldwide.
Posted on September 3, 2009.
The EUR/USD posted a solid recovery yesterday, exhibiting more strength than we expected considering Thursday’s economic data was nothing to cheer about. Furthermore, the S&P futures hung beneath 1000, providing little motive to devalue the Dollar. Investors may have been reacting to the breakout in gold since the Dollar has been negatively correlated with the Greenback.
Gold surged to $980/oz and was the talk of the town. Therefore, investors may have taken gold’s ascent as a hint that the Dollar should head lower. On the other hand, investors may have been comfortable keeping the EUR/USD afloat since the S&P’s recent contraction was mostly influenced by psychological factors. Either way, the FX markets have been difficult to track lately with the major Dollar crosses sending mixed signals. This tells us the Dollar may be approaching a turning point as investors grow anxious and jockey for position.
Meanwhile, the EUR/USD has returned earlier gains and is trading smack in the middle of our trend lines after U.S. weekly Unemployment Claims came in slightly above analyst expectations. America’s much anticipated ISM Services PMI data printed in line with estimates, only making the present picture muddier. We have yet to receive the market moving headlines we were anticipating. The ECB kept its benchmark rate at 1% while Trichet remained cautiously optimistic as anticipated. EU data has impressed on all fronts lately, including this week’s Flash CPI.
Therefore, the ECB had little reason to act other than to deliver a monetary shock. Due to the Euro’s resounding positive data, we anticipate the EUR/GBP could find bottom sometime soon as investors continue to snap up an oversold Pound. It’s the EU’s turn to take a break from economic data next week, so British data will need to present a strong case to gain back its relative strength. EU data is finished for the week, so the focus will turn to the G20 meetings and key employment data from the U.S. tomorrow.
Despite present indecisiveness in the EUR/USD, all three tiers of our trend lines are coming together beautifully with multiple inflection points on the horizon. The behavior of our trend lines indicates a turning point may finally be approaching. We’ve witnessed counterbalancing buy-side and sell-side volume with the currency pair experiencing lower highs and higher lows (9/01 excluded). Hence, the next near-term leg is hanging in the balance, though there remains a certain downward tendency in the currency pair due to recent weakness in the S&P.
As the summer winds down, we anticipate volume and volatility could return once again. The G20 meetings have been flying in under the radar and start up tomorrow. A potential market mover tomorrow could be a surprise in U.S. unemployment data. However, we believe the G20 meetings could be the wild card. We wouldn’t be surprised to see the topic of a new monetary standard return in a big way since volatility in the FX markets has abated. China may take the G20 meeting as an opportunity to breach the topic on a larger stage. Such a move could provide the jolt of volatility the EUR/USD’s inflection points are indicating. On the other hand, the EUR/USD may just opt to continue its erratic consolidation.
Technically speaking, our 3rd tier uptrend and downtrend lines play the largest trend-setting role on our chart. If our 3rd tier downtrend line fails, we anticipate a retest of August highs. On the flipside, a retracement below our 3rd tier uptrend line could result in a retest of August lows.
Meanwhile, the 1.40 and 1.45 psychological patiently wait in opposite directions. Investors should keep a close eye on the S&P futures. If the S&P futures should continue their downward momentum and head below technical supports the EUR/USD would likely exercise its positive correlation with U.S. equities.
Present Price: 1.4287
Resistances: 1.4300, 1.4309, 1.4327, 1.4347, 1.4366
Supports: 1.4276, 1.4261, 1.4251, 1.4224, 1.4208
Psychological: 1.40, 1.45
Analysis by FastBrokers
This post was written by:
Interactive Brokers - who has written 7 posts on Forex District.
Interactive Brokers Group, Inc.'s founding member has completed its 32nd year as a Broker Dealer. In its broker dealer agency business, IB provides direct access ("on line") trade execution and clearing services to institutional and professional traders for a wide variety of electronically traded products including stocks, options, futures, forex, bonds and funds worldwide.
Wednesday, September 2, 2009
Trading the Dollar Against a Basket of Other Currencies (USDX)
The US dollar index (USDX) is an important analytical tool for traders in just about any market. The USDX is actually a futures contract which means that if you have a futures trading account you could trade this instrument like corn, oil, gold or currency futures contracts. However rather than trading the USDX most retail traders use it as way to analyze the relative strength or weakness of the US Dollar in general.
The USDX compares the US dollar (USD) against a basket of other world currencies. This basket represents most of the largest free floating, major currencies in the world on a weighted average basis. The currencies included are the euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Each of these currencies are given a weight within the index with the largest weight given to the euro.
Because the euro is typically half the total weight included in the average the chart for the USDX will often look like a chart of the USD/EUR futures contract. Spot forex traders will notice that the USDX is very similar to an inverse of the EUR/USD spot forex pair. However, because the USDX includes 6 different currencies it is a better measure of USD strength than any single currency pair including the EUR/USD.
The USDX was established in 1973 with a starting value of 100. That means that if the USDX is measuring less than 100 the USD has lost relative value compared to what it was worth in 1973 and if it is above 100 then the USD is stronger than it was in 1973. Currently the USDX is hovering around 82, which means that it is 18% weaker than its starting value. The dollar has not always been weaker than it was in 1973. As you can see in the monthly chart below, the USDX showed a 20% improvement in value in the USD in 2001 and 2002.
USDX Weekly Chart
The USDX is particularly useful for traders in the bond, currency and gold markets. For example, a strong USD is usually correlated with falling gold prices, which means that gold traders are very interested in a break out on the USDX even though they may not be trading the USD directly. Similarly, global crises often increase demand for the USD as investors seek a shelter from uncertainty. This will drive the value of the USD up and often bond yields will drop. These are just two examples of how the USDX is one more intermarket tool you can use for evaluating capital flows and finding new trading opportunties.
You can find charts for the USDX on the pairs analysis pages in the forex section of the Learning Markets website but if you are interested in trading the USDX you have two attractive alternatives. First, you can open a futures account. There are futures and options on futures available on the USDX that trade on the New York Board of Trade.
Second you can trade ETFs that track the USDX itself. PowerShares offers two ETF alternatives for trading the index. The first is UUP which invests in long futures contracts on the USDX, which means it will move the same direction as the dollar index. The second is UDN which invests in short futures contracts on the USDX, which means that it will rise in value when the dollar index weakens. If you are bullish the dollar you could buy UUP and if you are bearish the dollar you could buy UDN.
razzimaniafreedom...
The USDX compares the US dollar (USD) against a basket of other world currencies. This basket represents most of the largest free floating, major currencies in the world on a weighted average basis. The currencies included are the euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Each of these currencies are given a weight within the index with the largest weight given to the euro.
Because the euro is typically half the total weight included in the average the chart for the USDX will often look like a chart of the USD/EUR futures contract. Spot forex traders will notice that the USDX is very similar to an inverse of the EUR/USD spot forex pair. However, because the USDX includes 6 different currencies it is a better measure of USD strength than any single currency pair including the EUR/USD.
The USDX was established in 1973 with a starting value of 100. That means that if the USDX is measuring less than 100 the USD has lost relative value compared to what it was worth in 1973 and if it is above 100 then the USD is stronger than it was in 1973. Currently the USDX is hovering around 82, which means that it is 18% weaker than its starting value. The dollar has not always been weaker than it was in 1973. As you can see in the monthly chart below, the USDX showed a 20% improvement in value in the USD in 2001 and 2002.
USDX Weekly Chart
The USDX is particularly useful for traders in the bond, currency and gold markets. For example, a strong USD is usually correlated with falling gold prices, which means that gold traders are very interested in a break out on the USDX even though they may not be trading the USD directly. Similarly, global crises often increase demand for the USD as investors seek a shelter from uncertainty. This will drive the value of the USD up and often bond yields will drop. These are just two examples of how the USDX is one more intermarket tool you can use for evaluating capital flows and finding new trading opportunties.
You can find charts for the USDX on the pairs analysis pages in the forex section of the Learning Markets website but if you are interested in trading the USDX you have two attractive alternatives. First, you can open a futures account. There are futures and options on futures available on the USDX that trade on the New York Board of Trade.
Second you can trade ETFs that track the USDX itself. PowerShares offers two ETF alternatives for trading the index. The first is UUP which invests in long futures contracts on the USDX, which means it will move the same direction as the dollar index. The second is UDN which invests in short futures contracts on the USDX, which means that it will rise in value when the dollar index weakens. If you are bullish the dollar you could buy UUP and if you are bearish the dollar you could buy UDN.
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