Formula & Calculation Mechanism
Basket of 6 major currencies weighted against USD (EUR, JPY, GBP, CAD, SEK, CHF)
A surging US dollar reduces overseas revenue for US multinational companies when converted back to USD and tightens global dollar liquidity.
Market Impact on US Equities & S&P 500
DXY weakening towards 100 provides a headwind for global equities and commodities; DXY surging past 106 tightens global financial conditions.
Historical Precedents & Bull/Bear Regimes
In September 2022, DXY hit a 20-year high of 114.7, marking the major bottom for global stock markets.