How to Trade Australian Dollar FuturesAustralian Dollar Futures are futures contracts for the US dollar vs Australian dollar. Speculators can buy australian dollars if they feel they are going to appreciate against the US Dollar or sell if they have the opposite view.
Investing in the Australian DollarThe futures contract can be used to invest short, medium or long term. The pricing is related to the interest rates of the two nations. Currently Australia has a higher benchmark interest rate, so if you are long you earn a premium, if you are short you have to pay a premium to the reflect the interest rate differentials. This is all factored into the pricing.
Australian Dollar Chart Value of the Australian DollarAs we can see from the chart above, the value of the Australian dollar has appreciated considerably against the US dollar. From 2001-2008 the pair appreciated by around 75%, this is a big jump for a currency pair.
Australian Dollar Contract DetailsThese contracts are traded on the NYBOT and CME exchanges. One standard NYBOT contract represents AU$200,000. A standard CME contract represents AU$100,000. The nominal value in US Dollars depends on the exchange rate at the time.ConclusionIn conclusion, those who bought and held onto Australian Dollars will have done very well due to the Australian dollar strength. However, as with all futures contracts, there is considerable risk and it is important to fully understand these risks before trading.Return from Australian Dollar Futures to Currency Future Trading Return to the Homepage
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