Author: Doumkou Stefani
Publication date: 09.08.2024
The foreign exchange market is a market of continuous fluctuations in currency values. To be able to estimate the rate of these changes, there are currency indices showing the performance of the major world currencies against a basket of other currencies. This article ranks the performance of seven major currency indices: the U.S. dollar, the Euro, British pound, Swiss franc, Japanese yen, Canadian dollar, and New Zealand dollar using their performance metrics and volatility measures.
1. Swiss Franc Currency Index (SXY)
The Swiss Franc Currency Index stands out due to its strong short-term and long-term performance combined with moderate volatility. Despite a slightly negative year-to-date (YTD) performance, it is ranked first overall for its robust gains over various timeframes and manageable risk level.
2. British Pound Currency Index (BXY)
Ranked second, the British Pound Currency Index demonstrates positive long-term performance and reasonable short-term performance with low volatility. Although it has negative short-term performance (1 week to 1 month), its overall stability and strong long-term gains make it a reliable option.
3. Euro Currency Index (EXY)
The Euro Currency Index, ranked third, shows positive short-term performance and very low volatility. However, it suffers from negative long-term performance. Despite this, its stable and low-risk profile contributes to its higher ranking.
4. U.S. Dollar Currency Index (DXY)
Ranked fourth, the U.S. Dollar Currency Index boasts positive long-term performance and moderate volatility. However, it faces negative short-term performance (1 week to 3 months). Its solid long-term gains and moderate risk maintain its competitive position.
5. Japanese Yen Currency Index (JXY)
The Japanese Yen Currency Index, placed fifth, excels in short-term performance but struggles with negative long-term performance and high volatility. Its good recent performance is overshadowed by higher risk and poor long-term metrics.
6. New Zealand Dollar Currency Index (ZXY)
Ranked sixth, the New Zealand Dollar Currency Index exhibits positive short-term change and moderate long-term gains. However, it has negative short-term performance and high volatility, making it a less stable option.
7. Canadian Dollar Currency Index (CXY)
The Canadian Dollar Currency Index, placed seventh, shows positive short-term change but has negative performance across most metrics and moderate volatility. Its consistent negative performance makes it the weakest among the seven indices.
Methodology
Lastly, it's important to mention the methodology for analyzing and ranking the currency indices. The steps and data used are as follows:
1. Data Collection: We sourced performance data for each currency index (e.g., DXY, EXY, BXY) from TradingView, covering periods—weekly, monthly, quarterly, semi-annual, annual, five years, ten years, and all-time.
2. Selection: We focused on major currency indices (EU, USA, Swiss, British, Japanese, Canadian, Australian, New Zealand) available on the TradingView platform.
3. Ranking: Indices were ranked from best to worst based on normalized performance and volatility data, reflecting their overall performance dynamics.
Conclusion
The performance statistics for major currency indices show varied trends over different time frames, reflecting the complexities of global currency markets influenced by numerous economic, political, and market factors. Notably, the Swiss Franc (SXY) tops the ranking with strong gains and moderate volatility. Similarly, the British Pound (BXY) and Euro (EXY) also perform well, with BXY benefiting from low volatility and EXY showing short-term stability. On the other hands, the U.S. Dollar (DXY) maintains a solid long-term performance despite short-term weaknesses. In contrast, the Japanese Yen (JXY) excels in the short term but is hindered by high volatility and poor long-term metrics. Meanwhile, the New Zealand Dollar (ZXY) and Canadian Dollar (CXY) show the weakest overall performance due to higher volatility and weaker long-term metrics.
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Disclaimer: Currency values mentioned in this blog article are accurate as of 08/08/2024 and may change over time.
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