The weighting assigned to each currency in the index is estimated to reflect the competitiveness of US goods versus that specific country's goods in world markets. For example, the weight given to Canada should represent the competitiveness of US goods against Canadian goods in markets outside either of the two countries. The biggest weighting goes to the euro, with 42%. This is followed by the Japanese yen with 30%.
“In uncertain times, a tool that provides an efficient and immediate way to gain or reduce broad exposure to the US dollar becomes increasingly useful,” said CME chief executive Jim McNulty. “Hedge funds and other professional money managers will have greater ability to manage risk in a portfolio of international equities, fixed income or foreign exchange instruments,” he added.
The first expiration to be listed will be June. The contract will be traded on the CME’s trading floor and on its Globex electronic trading platform.