Definition
A trade-weighted index measuring the USD against a broad basket of currencies. A stronger dollar typically tightens global liquidity.
The Broad Dollar Index (DTWEXBGS from FRED) is more comprehensive than the DXY (which only tracks 6 major currencies). A rising dollar increases the real burden of USD-denominated debt globally, tightens financial conditions in emerging markets, and tends to compress commodity and crypto prices. Our model gives it an 8% weight with "higher_worse" direction.