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Is DXY effected by futures transactions?


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Is DXY effected by futures transactions?

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  #1 (permalink)
chicago, IL USA
 
 
Posts: 7 since Mar 2020
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I've been curious if futures transactions have an effect on the DXY price action. I'm an FX trader and consecutively trade EUR/USD and have been wondering about this for a long time now and can't seem to get anything definitive on the web surprisingly.

I'm aware of the effects of the spot currencies prices as the EUR is close to 60% of the make-up. However I am wondering about the futures and/or any other derivatives linked to it.

My thought was any instrument tied to the common would have some effect but in this case DXY is an indices.

Are there swaps on the DXY as well? if anybody knows...

Thanks

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  #2 (permalink)
Legendary Market Wizard
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DXY is a weighted geometric mean of 6 USD spot exchange rates which as you say is very heavily weighted to the USD:EUR rate. Futures and other derivatives, only affect it in the capacity that they affect the underlying spot FX rates. Given the size of the spot FX markets compared to the futures market I would expect that effect to be small.

I don't know about swaps on DXY but ICE (who calculate the DXY index) do list DX futures, which are futures on the DXY index.

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  #3 (permalink)
chicago, IL USA
 
 
Posts: 7 since Mar 2020
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Thanks for the reply SMCJB. I just needed to gain a little more knowledge on the factors moving price of both besides the algorithmic net of al the currencies.

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September 27, 2020


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