Can anyone tell me what this means?

[Puppycow]

US Dollar Index Future - Spot Price
INDEX: DXY


Current price is 76.37.
What exactly does that buy?

 

[Lothian]

US Dollar Index Future - Spot Price
INDEX: DXY


Current price is 76.37.
What exactly does that buy?

Nothing. It is simply used to settle bets postions.


edited to add. The above answer is about as wrong as you can get. It buys money.

 

[Puppycow]

Nothing. It is simply used to settle bets postions.

OK, I get it.
Dollar slides on fresh signs of economic strength
Japan's Fujii not eager to intervene to weaken yen

The dollar index (DXY), a measure of the greenback against a trade-weighted basket of major currencies, fell to 76.337, down about 0.2% from its level late Tuesday.

 

[Puppycow]

edited to add. The above answer is about as wrong as you can get. It buys money.

A speculator or hedger would buy this if they think the dollar will get stronger against other currencies or want to hedge against that, right?

 

[Francesca R]

It's the spot "dollar index" which is an arithmetic weighted average of the US dollar's spot rate versus EUR, JPY GBP, CAD, SEK and CHF. More than half of it is the euro.

 

[lomiller]

It’s an indicator of the relative strength of the USD. It’s worth noting that while it’s lower then a few moths ago, it’s higher then it was a year ago. IOW the USD is still stronger then it was before the Lehman collapse and financial market seize-up.

In the bigger picture, the USD has been in a long term decline since about 2000, that temporally reversed itself during the financial crisis, but it’s now reverting to that longer term trend. (Unless I'm mistaken this particualr metric doesn't go back that far.)

 

[Francesca R]

It goes back to the Bretton Woods fixed rate era (chart is since 1970). Note it is the nominal value of the $, not accounting for relative inflation

 

[Lothian]

A speculator or hedger would buy this if they think the dollar will get stronger against other currencies or want to hedge against that, right?

I don't think it works like that. It appears to be a pure futures market. So you agree now to buy or sell at a fixed price sometime in the future.

It also appears to be settled by delivery, so on the relevant date you actually buy or sell the currencies. Many futures exchanges don't rely on the goods being delievered you simply work out the margin. Here you swap your $ for 6 other currencies (or the other way round) that could be worth more or less that the price you agreed.

 

[Puppycow]

Thank you all for the additional info.