The dollar is the world's price; everything else is denominated in it. When the dollar strengthens, emerging-market borrowing tightens, commodity bills inflate, and capital flees back home. When it weakens, the opposite — risk appetite expands and emerging-market assets reflate. This index reads the broad dollar (DXY) against its principal Asian and European counterparties — yuan, yen, won, rupee, euro. The weighting tilts toward Asia, reflecting where the marginal trade and capital relationship lives. Quantile bands: - 0.0–0.2: dollar weak, regime-shifting (rare — usually marks the back end of a cycle) - 0.2–0.4: normal weakness, EM-favorable - 0.4–0.6: watchful — directional uncertainty - 0.6–0.8: strong dollar, EM stress rising - 0.8–1.0: reserve-currency flight, systemic stress (March 2020, late 2022 peaks)
Revision — 25 September 2026
The five currency components (yuan, yen, euro, rupee and won) had only been stored from April 2026. Their "12-month" change was really measured against a point about five months back and scored against a few months of history. Each currency's full history is now stored, so every change is a true year-over-year change scored over the 24-month window. The rates for 3 August 2026, which FRED later corrected, were also replaced with the corrected figures. Every reading since May 2026 was recomputed, so the chart has no break. The index read 36 before this revision and 46 after.