We’ve talked about the U.S. Dollar Index (USDX) and the Trade-Weighted Dollar Index, but traders who want a spot index price on the U.S. Dollar can also turn to the Bloomberg dollar spot index (BBDXY) for help. It tracks the performance of a basket of 10 foreign currencies against the U.S. Dollar.
The composition of this index is updated yearly to reflect a diverse set of currencies to compare against the USD.
The Bloomberg dollar spot index may be a better option in some cases than the widely acclaimed DXY because they update the composition of their index yearly. Bloomberg insists that this makes their index more useful to a broad range of traders.
Every currency included in the BBDXY is weighed based on its levels of international trade and FX liquidity for the year. Below you’ll find the 2021 weights:
Is the Bloomberg Dollar Spot Index a Better Measure of the US Dollar?
People want to know if they should pay any attention to the BBDXY compared to the more well-known DXY. There are some advantages to the BBDXY that you should know about.
More Representatives Index
The annual changes to the index make it more representative, as does the fact that it includes a basket of ten foreign currencies instead of six, as you can see in the above table.
More Diversified
This index isn’t so heavy on the Euro and remains more diversified. Check out the DXY weights:
Compared to the BBDXY weights:
More Dynamic
It includes currencies from emerging markets that also play a role in the value of the U.S. Dollar. Take a look at how the weights have fluctuated over the years.
If you ever want to check out the spot price of the BBDXY, simply go to the Bloomberg BBDXY page here.
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