![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2017\/07\/Screen-Shot-2017-07-22-at-7.56.44-PM.png\")
<\/a><\/p>\nTHE US-DOLLAR INDEX:<\/h3>\n
The\u00a0US-Dollar Index<\/b>\u00a0(USDX, DXY) is an\u00a0index\u00a0(or measure) of the value of the\u00a0United States dollar\u00a0relative to a\u00a0basket\u00a0of foreign currencies,\u00a0often referred to as a basket of U.S. trade partners currencies.<\/p>\n
The Dollar Index is a\u00a0weighted geometric mean\u00a0of the dollar’s value relative to other select currencies:<\/p>\n
- \n
- Euro\u00a0(EUR), 57.6% weight<\/li>\n
- Japanese yen\u00a0(JPY) 13.6% weight<\/li>\n
- Pound sterling\u00a0(GBP), 11.9% weight<\/li>\n
- Canadian dollar\u00a0(CAD), 9.1% weight<\/li>\n
- Swedish krona\u00a0(SEK), 4.2% weight<\/li>\n
- Swiss franc\u00a0(CHF) 3.6% weight<\/li>\n<\/ul>\n
![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2017\/07\/sophomore-usdx-components-300x199.png\")
<\/a><\/p>\nUSDX goes up when the U.S. dollar gains “strength” (value) when compared to other currencies in the basket and visa versa.<\/p>\n
USDX is updated whenever U.S. Dollar markets are open, which is from Sunday evening New York City local time (early Monday morning Asia time) for 24 hours a day to late Friday afternoon New York City local time.<\/p>\n
THE EURO SURGED TO 2.5-YEAR HIGH:<\/h3>\n
The sliding dollar sent the Euro surging as high as 1.626, against the USD, its \u00a0highest level since January of 2015, as can be seen from below chart.<\/p>\n
![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2017\/07\/Screen-Shot-2017-07-22-at-8.37.16-PM-300x200.png\")
<\/a><\/p>\nPGM CAPITAL ANALYSIS & COMMENTS:<\/h3>\n
The USD-Index Basket needs to be updated:<\/h4>\n
The make up of the “USD-Index basket” has been altered only once, when several European currencies were subsumed by the Euro at the start of 1999.<\/p>\n
Due to this we believe that the make up of the “basket” is overdue for revision as China, Mexico, South Korea and Brazil are\u00a0major trading partners\u00a0presently, which currently are not a part of the index whereas Sweden and Switzerland are continuing as part of the index.<\/p>\n
Outlook for the USDX and the US-Dollar:<\/h4>\n
As can be seen from below chart, Year-To-Date the\u00a0US dollar index\u00a0already has fallen more than 10%.<\/p>\n
![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2017\/07\/Screen-Shot-2017-07-22-at-8.56.47-PM-300x204.png\")
<\/a><\/p>\nRemember just three months ago when\u00a0President Trump\u00a0<\/a>was\u00a0worried that the US-Dollar was too strong in a quote he said on Wednesday, April 12th:<\/p>\n
![\"\"](\"http:\/\/www.pgmcapital.com\/wp-content\/uploads\/2017\/07\/MW-FK337_trump__20170412161612_ZH-300x169.jpg\")
<\/a>Donald Trump sits for an Oval Office interview with reporters on April 12, 2017.<\/p><\/div>\n
\u201cI think our dollar is getting too strong, and partially that\u2019s my fault because people have confidence in me.\u201d<\/p><\/blockquote>\n
We believe that the worsening outlook for the US-Dollar represents something much deeper and that the significant USD slump of YTD, reflects a major underlying USD scepticism in the market, that the Trump trade is over, and that all hopes of a major growth boost from Washington has been abandoned some time ago.<\/p>\n
The outlook of a moderate economic growth of the country has raised the possibility that the Federal Reserve will\u00a0delay the next round of interest rate increases, also contributed\u00a0to the dollar vulnerability.<\/p>\n
Foreign-exchange options markets show that traders are\u00a0the least bullish they\u2019ve been on the dollar since May 2016.<\/p>\n
In its place other currencies have flourished, most notably the Mexican peso, to which the dollar has lost more than 15% of its value this year.<\/p>\n
Below table shows the performance of the USD-Dollar YTD against some other major world currencies:<\/p>\n