Dow Jones and CME create FX index to hedge against US dollar

american-dollar
Dow Jones and CME index provides dollar hedging tool

The Dow Jones CME FX Index uses future contracts on the Australian dollar, sterling, Canadian dollar, euro, yen and Swiss franc. This index adds to the incumbent US Dollar Index which is calculated against a basket of euro, yen, Canadian dollar, British pound, Swedish krona and Swiss franc.

The index has been created as part of the partnership forged earlier this year between Dow Jones and CME. The new venture is 90% owned by CME and 10% owned by Dow Jones, and it operates Dow Jones Indexes.

Dow Jones and CME have created futures contracts based on the index and there are exchange-traded fund (ETF) licences available, although none has been agreed yet. It is also expected to provide a useful hedging tool for ETF providers, according to CME.

Dow Jones also recently announced it has licensed five of its indexes to Canadian financial group BMO to underlie ETFs. The five indexes are the Dow Jones North America Select Junior Oil, the Dow Jones North America Select Junior Gas, the Dow Jones Canada Select Equal Weight Reit, the Dow Jones US Large-Cap Health Care Equal Weight Total Stock Market, and the Dow Jones US Large-Cap Banks Equal Weight Total Stock Market indexes.

 

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