Dollar index (USDOLLARINDEX &；; RegUSDX is an indicator that comprehensively reflects the exchange rate of the US dollar in the international foreign exchange market, and is used to measure the degree of exchange rate change of the US dollar against a basket of currencies.
It measures the strength of the US dollar by calculating the comprehensive rate of change between the US dollar and a selected basket of currencies, thus indirectly reflecting the changes in US export competitiveness and import costs.
The dollar index is not from Chicago Board of Trade (CBOT) or Chicago Mercantile Exchange (CME), but from new york Cotton Exchange (NYCE). New york Cotton Exchange was founded in 1870, which was originally composed of a group of cotton merchants and middlemen. At present, it is the oldest commodity exchange in new york and the most important cotton futures and options exchange in the world.
1985, new york cotton exchange established the finance department, and officially entered the global financial commodity market. The first is the US dollar index futures.
Hedging transaction is to conduct two market-related transactions at the same time, in opposite directions, with the same amount, and break even. Market correlation refers to the identity of market supply and demand that affects the prices of two commodities. If the relationship between supply and demand changes, it will affect the prices of two commodities at the same time, and the prices will change in the same direction.
The opposite direction means that the buying and selling directions of two transactions are opposite, so that no matter which direction the price changes, there is always a profit and a loss.
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There is a rift in the historical relationship between gold and the dollar, which is considered to be a temporary "fracture" in their correlation. The price trend of precious metal gold is usually opposite to the US dollar index of the Intercontinental Exchange (ice).
The dollar index is used to measure the strength of the dollar against a basket of six currencies. Because the depreciation and appreciation of the dollar can affect the attractiveness of gold priced in dollars to other currency holders, in other words, if the dollar weakens, the price of gold will rise. However, the close relationship between the two in the past has recently faced serious pressure.
The day after Britain withdrew from the EU referendum, the price of gold futures jumped by 4.7% to $0 1.322.40 per ounce, a record high in two years. On the same day, the pound fell to its lowest level against the US dollar since 1985, while the US dollar index of the Intercontinental Exchange soared by 2.5%.
Wong said that since the results of Britain's referendum on leaving the EU were announced, the correlation of gold and the dollar index has risen to the highest level in many years. Historically, the negative correlation between the gold price and the US dollar index is very significant, but only when the financial market pressure is at an extreme level and both are regarded as safe-haven assets, the trend is positively correlated.
NicoPantelis, research director of SecularInvestor, said that this situation also happened during the financial crisis in 2008, when the trend of gold price and dollar was almost "hand in hand".
Pantelis said that at present, the US dollar index is trading at a relatively high level, and gold is also sought after by investors, so today's gold price is a function of demand, just like in the past.
Analysts of SprottAssetManagement pointed out in a report on Tuesday that since the beginning of this year, investors have bought about 40 million ounces of gold through futures or exchange-traded funds, an increase of 64%. And the current market position is about/kloc-0.02 million ounces, which is close to the historical high.
However, Wong said that there is no obvious direct financial pressure to explain why the trend of gold and the dollar has turned into a positive correlation.
Wong believes that the change in the correlation between the two is attributed to central banks, because the active monetary policies of central banks around the world make the correlation between cross-class assets more unstable or increase. Sprott's gold research team pointed out in a report on Tuesday that the correlation between asset prices has become more unpredictable and extremely unstable.
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