Dow Jones Index (abbreviated as DJI) was introduced by Charles Henry Dow in the end of the 19th century. Charles Dow was an editor of Wall Street Journal newspaper and a founder of Dow Jones & Company. This index was purposed to trace development of industry branch of the US stock markets, therefore it was named “industrial”. Originally Dow Jones Index represented an arithmetic average of 12 largest stocks of American industrial companies. Over the years the number of constituent companies grew, and by this moment Dow Jones industrial includes indices of 30 largest companies of the USA representing a scaled average of their stock prices.
A scaled average is a conditional variable of the arithmetic average value. As the number of stock changes, divider changes as well. Upon that, the number of stocks can alter through their splitting or consolidation. Splitting shares is conducted with the purpose of making them more available for a trader and decrease the price of one share.
As the economy develops, not only figures of secondary sector (industrial), but the figures of primary sector of economy are required to be tracked. Among all, primary sector includes agriculture and resource production (precious metals, oil). Thus, upon introduction of Dow Jones subindices, the popularity of Dow Jones-UBS Commodity Index grew.
Dow Jones-UBS Commodity Index
Dow Jones-UBS Commodity Index (abbreviated DJ-UBSCI) is one the most frequently used by traders and analysts of the Forex market in fundamental analysis. Dow Jones Commodity Index represents a total of subindices and includes goods traded on the US exchanges: grain, industrial goods, precious metals, products of animal farming, oil etc. It allows investors to forecast prices due to anticipating figures, because DJ-UBSCI consists of commodity futures for physical goods with delivery date.
Since this index shows commodity prices over time, it helps to estimate tendency. Dow Jones-UBS Commodity Index is used by traders among all to analyze commodity currencies such as New Zealand, Australian and Canadian dollars, because these countries are mainly oriented for export of commodities. Therefore, commodities price surge often leads to the growth of national currency and vice-versa.