Dow Jones, FXCM launch benchmark tracking four currencies vs. dollar

By Susanna Moon

Chicago, May 4 - Dow Jones Indexes said it collaborated with FXCM Inc. to create the Dow Jones FXCM Dollar index, which provides a balance of geographic and geopolitical exposure to European and Asian economies from a currency perspective.

The new index reflects the change in the value of the U.S. dollar against a weighted basket containing the euro, British pound, Japanese yen and Australian dollar.

This four-currency combination accounts for more than 80% of worldwide spot market activity in the foreign-exchange marketplace, according to a Dow Jones press release.

The index employs a methodology that uses FX quantities as the basis of its calculation, rather than FX spot rates, in an effort to ensure a clear and transparent index, the release noted.

This approach seeks to replicate real-world FX portfolio construction, allowing the index to serve as the basis for a wide range of instruments such as exchange-traded funds, mutual funds, forwards, futures, swaps, options and structured products.

"The Dow Jones FXCM Dollar index is an effective, straightforward and easily replicable measure of the value of the U.S. dollar compared to a diversified global basket of the world's most liquid currencies," Michael A. Petronella, president, Dow Jones Indexes, said in the release.

"It provides investors with a unique tool for following real-time changes in the relative value of the world's most economically significant currency."

FXCM Inc. is an online provider of foreign exchange trading and related services.

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