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A surging U.S. dollar presents fresh opportunity

ICE's U.S. Dollar Index serves as a reliable global benchmark for the greenback


May 2024

Dwijen Gandhi

Senior Director, Head of Product Development, ICE Data Indices

The Japanese yen has been hitting multi-decade lows against the U.S. dollar, triggering speculation of an intervention, and renewing focus on the greenback’s strength against a wide range of major currencies. For market participants, currency volatility can highlight the need to hedge their positions, take advantage of arbitrage opportunities, or promote products which trade on these dynamics.

The ICE U.S. Dollar Index (DXY) has long served as a consistent and leading benchmark for the value of the dollar against a basket of foreign currencies since it was devised in the mid-1970s and launched as an official index in 1985. It is a geometrically-averaged calculation of six currencies trade-weighted against the U.S. dollar:1

Japanese Yen13.60%
British Pound11.90%
Canadian Dollar9.10%
Swedish Krona4.20%
Swiss Franc3.60%

The DXY index has sustained a long-term uptrend since the 2008 financial crisis, rising by 32.14% over just the last ten years.2 Much of this rise was driven by the dollar strengthening 28.88% against the Euro due to a relatively more hawkish Federal Reserve compared to the European Central Bank, as well as market instability and rising debt issues in several European countries.

The positive DXY ten-year performance is also attributable to a 34.51% rise in the dollar versus the pound, with Brexit being a key factor in the pound’s underperformance. Still, this was overshadowed by the dollar’s 49.72% appreciation against the yen, primarily due to the Bank of Japan’s extremely loose monetary policies.

ICE U.S. Dollar Index (DXY)

The recent post-Covid years have seen the value of the U.S. dollar – and DXY index – exhibit even greater volatility. Off a closing low of 89.32 on January 6, 2021, the DXY index then appreciated by 27.89% over just the following 21 months to close at 114.24 on September 27, 2022. This was a time marked by expectations of rate hikes by the Federal Reserve finally crystallizing into federal funds rate increases.

The dollar’s fluctuations were not over. Expectations around looser Fed monetary policy, a global economic recovery and improved market sentiment saw the DXY index subsequently decline by 12.68% to 99.75 in the 9.5 months leading up to July 13, 2023.

Today, nearly ten months later, the ICE U.S. Dollar Index has reversed and risen by 5.34%. This performance has been driven by gains against all DXY index constituent currency pairs:

1 Month0.82%0.66%0.87%0.84%1.15%1.61%0.21%
3 Months1.07%0.22%3.13%0.67%1.67%3.13%4.39%
6 Months0.01%-0.29%2.42%-1.34%0.18%-0.57%0.65%
1 Year3.81%2.80%13.63%0.18%0.51%5.44%2.36%
10 Years32.14%28.88%49.72%34.51%24.72%66.27%3.06%
July 13, 20235.34%4.30%10.79%4.68%4.36%6.01%5.32%

*Returns as of May 3, 2024

The 10.79% increase in the value of the U.S. dollar versus the Japanese yen has been in the spotlight during this time. With the Bank of Japan maintaining a relatively looser interest rate policy, the weaker yen has benefitted Japanese manufacturers and exports, resulting in positive performance for the broad Japanese equity markets. The NYSE FactSet Japan Global Moat Leaders Index (TR) has risen by 35.28% and the NYSE FactSet Japan Leading Manufacturers Index (TR) by 22.79% in local currency (yen) terms during this ~10-month period.

Yet ultimately, the dollar also appreciated against the Euro (4.30%), British Pound (4.68%), Canadian Dollar (4.36%), Swedish Krona (6.01%), and Swiss Franc (5.32%).

While it’s impossible to forecast direction for the U.S. dollar, the ICE U.S. Dollar Index will continue to provide a widely-recognizable gauge of U.S. dollar strength or weakness.

1 Please consult the full methodology for the ICE U.S. Dollar Index which is available on the ICE Index Platform at under the alternate symbol ‘NYICDX’.

2 Unless otherwise indicated, all index and spot currency returns are measured to May 3, 2024.