What would happen to DXY futures contracts if the Euro lost some of its member states like Italy and Greece? Right now the Euro is roughly half of the currency weight in the dollar index.
The Euro is up 50% against the USD in 10 years.... Which curreny excactly is collapsing? But say the Euro does collapses, fine... The Euro would probably be replaced by the strongest members rising out of the ashes against wich the USD can decline as US policy makers have a deeply engraved belief a weaker currency is beneficial to economic progress.
Thanks Debaser82. My question is more of a technical nature about DXY futures contracts, which are based on the Dollar Index, which has roughly a 50% weighting for the current Euro currency. If a member state of the Euro were to suddenly revert to their national currency (e.g. Greece reverts to their Drachma on some Friday evening), I'm wondering what would happen to the composition of the Dollar Index. Would it be based on some New Euro alone, or New Euro + currencies that may exit?
"Which currencies are included in the U.S. Dollar Index? The U.S. Dollar Index contains six component currencies: the euro, Japanese yen, British pound, Canadian dollar, Swedish krona and Swiss franc. Before the creation of the euro, the original USDX contained ten currenciesâthe ones that are currently included (but not the euro), plus the West German mark, the French franc, the Italian lira, the Dutch guilder, and the Belgium franc. The euro replaced the last five of these currencies." https://www.theice.com/publicdocs/futures_us/ICE_Dollar_Index_FAQ.pdf not so much if any individual country or countries dropped out of the euro, but if the euro ceased to exist, which would cause massive problems and is unlikely to occur. I think that once 'they've' got all the indebted countries 'under control' in the sense of austerity measures, Italy, Spain, Portugal, Belgium are the main ones, then they might allow the ECB to act and feed in some funds - print money. they won't allow that at present since Greece etc haven't yet taken responsibilty to 'Do Something' besides asking for handouts - good money after bad