Trade-Weighted Dollar Index

## What this measures

The Nominal Broad U.S. Dollar Index measures the value of the dollar against a basket of foreign currencies, weighted by trade flows. The index is set to 100 in January 2006.

## Why it matters

A stronger dollar reduces the cost of imports and overseas expenses but makes exports less competitive and cuts the dollar value of foreign revenues. It also signals shifts in global capital flows and risk appetite that affect funding costs, supply chain decisions, and the attractiveness of dollar-denominated assets. Currency moves alter the relative purchasing power of budgets and the competitiveness of products in international markets.

## How to read it

A rising index means the dollar is strengthening against trading partners' currencies; a falling index means it is weakening. Compare levels over time to gauge the pace of appreciation or depreciation. Because the index is normalized to January 2006, differences from 100 show cumulative change since that baseline.

## What it does not say

The index does not capture real purchasing power after inflation, nor does it predict future exchange rates or specify which currencies are driving the change. It reflects trade weights at a point in time and may not match the exposure of any single organization.

## Source

The Federal Reserve publishes the Nominal Broad U.S. Dollar Index daily. Palanor pulls this series from the FRED API nightly.