Currency Futures
Currency futures are a type of financial derivative that allows investors to speculate on the future value of a currency. They are traded on an exchange, and the price of the contract is based on the spot price of the underlying currency. Currency futures are used by investors to hedge against currency risk, as well as to speculate on the direction of the currency.
History of Currency Futures
Currency futures have been around since the early 1970s, when the Chicago Mercantile Exchange (CME) began offering them. Since then, currency futures have become a popular way for investors to hedge against currency risk and to speculate on the direction of the currency. Currency futures are traded on exchanges around the world, including the CME, the London International Financial Futures and Options Exchange (LIFFE), and the Tokyo Financial Exchange (TFX).
Comparison of Currency Futures
| Currency | Contract Size | Tick Size | Tick Value |
|---|---|---|---|
| EUR/USD | 125,000 EUR | 0.0001 | 12.50 USD |
| GBP/USD | 62,500 GBP | 0.0001 | 6.25 USD |
| USD/JPY | 100,000 USD | 0.01 | 1000 JPY |
Summary
Currency futures are a type of financial derivative that allows investors to speculate on the future value of a currency. They are traded on an exchange, and the price of the contract is based on the spot price of the underlying currency. Currency futures are used by investors to hedge against currency risk, as well as to speculate on the direction of the currency. For more information on currency futures, investors can visit the websites of the CME, LIFFE, and TFX.
See Also
- Currency Options
- Currency Swaps
- Forward Contracts
- Interest Rate Futures
- Commodity Futures
- Options on Futures
- Equity Futures
- Index Futures
- Credit Default Swaps
- Swaptions
