The value of the US dollar against a fixed basket of six other currencies. It is not a measure of what a dollar buys in a shop; it is a measure of the dollar against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc. Crypto watches it because it is the cleanest single read on global dollar conditions. When dollars are scarce and expensive, the assets furthest out on the risk curve tend to be sold first, and crypto is a long way out on that curve.
Live. The figure above updates in your browser while this page is open, and the page was built with a real one in it rather than a blank.
The plain description
The value of the US dollar against a fixed basket of six other currencies. It is not a measure of what a dollar buys in a shop; it is a measure of the dollar against the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc.
Crypto watches it because it is the cleanest single read on global dollar conditions. When dollars are scarce and expensive, the assets furthest out on the risk curve tend to be sold first, and crypto is a long way out on that curve.
Stated so you could reproduce it
ICE publishes the formula and it has not changed since 1973. It is a geometric mean of six exchange rates raised to fixed weights, multiplied by a scaling constant of 50.14348112.
The weights are euro 57.6 percent, yen 13.6, pound 11.9, Canadian dollar 9.1, krona 4.2 and franc 3.6. The euro alone is more than half the index, which means a large part of what people call "dollar strength" is the euro moving.
Our figure is computed from that formula using public daily exchange rates rather than licensed from ICE, so it tracks the quoted index closely without matching it tick for tick, and it updates once a day rather than continuously. The tile says so.
The bands, and what each one actually means
| Reading | What it indicates |
|---|---|
| Below 95, weak dollar | Loose dollar conditions. Historically a tailwind for risk assets including crypto. |
| 95 to 100, soft | Unremarkable. |
| 100 to 105, firm | Unremarkable in the other direction. |
| Above 105, strong dollar | Tight dollar conditions. Historically a headwind, and sharp rises in particular have coincided with risk asset drawdowns. |
The part that gets left out
- The relationship is loose, lagging and not a rule. There have been long stretches where the dollar and Bitcoin rose together, and they are not errors.
- More than half the index is the euro. A story about the European economy can move "the dollar index" without anything happening in the United States.
- It excludes the currencies of several of the largest economies, including China, so "the dollar against the world" is not what it measures.
- The direction matters more than the level. 103 tells you little; 103 after a month at 96 tells you something.