The Swiss franc is currently grabbing headlines for the sharp volatility in the currency following the removal of the 1.2000 EUR/CHF floor by the Swiss National Bank. However, before the franc grabbed the spotlight, the star of the second half of 2014 was the US dollar. Rising against other major currencies as the US economy appeared to be revving fast enough to finally warrant the Fed to increase interest rates, the Dollar Index moved to multi-year highs, having recently surpassed 90.00.
Benefiting from the dollar’s strengthening during 2014 was the IntercontinentalExchange (ICE), where volumes of its US Dollar Index futures recorded an all-time quarterly high during the final quarter of the year. For the Q4 2014 period, 2,709,923 futures contracts were traded, surpassing the previous record of 2,601,188 contracts during Q2 2013. For the ICE, the emergence of demand for the Dollar Index product was a boon for their overall FX trading division, as the Dollar Index dominates volumes of the unit.
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Explaining the sharp increase in trading and whether the volatility attracted new participants to the Dollar Index, Scott Brusso, Director FX Sales at ICE Futures US, stated to Forex Magnates, “The US Dollar Index is the most widely recognized and followed benchmark for the performance of the U.S. dollar. The main users are a combination of financial market participants, from banks and trading firms to commercial entities that have a requirement to hedge their currency exposure. We are seeing an increasingly diverse global user base in FX futures based on it being a capital efficient and regulated environment for risk management.”