DOLLAR INDEX RECENT HISTORY

The Dollar Index (DXY) was originated by the Federal Reserve and was originally designed before the Euro came into being, therefore it may come as no surprise that the Euro makes up more than 50% (57.6% actual) of the dollar index with Japan being number two at 13.6%.  The Pound Sterling (11.9%), Canadian Dollar (9.1%), Swedish Krona (4.2%), and Swiss Franc (3.6%) follow.  The Dollar Index is a weighted geometric mean of these six currencies, our six most important trading countries (Note: China is not on the list.).*

Very recently the Dollar Index has risen sharply, i.e. the dollar has strengthened, making exports from the US more expensive and imports less expensive that will no doubt widen our trade deficit.   Below is a graph of the Dollar Index going back through 2006.  You can see that the Dollar Index is now at its third highest peak since the Great Recession;  however it has been much higher and topped 120 briefly in 2001 and didn't drop below 100 until April of 2003.**  It has remained below 100 ever since.  It dropped below 72 in April of 2008.***  It closed on November 19 at 87.11.

Figure from BarChart: http://www.barchart.com/quotes/stocks/$DXY


* http://en.wikipedia.org/wiki/U.S._Dollar_Index
** http://futures.tradingcharts.com/historical/US/2001/0/continuous.html
*** Actually there was a "flash crash very briefly in the dollar index in April of 2007.