Australian dollar futures contracts

By | May 24, 2017
How to trade Australian dollar futures contracts

The Australian dollar futures contracts are derivative instruments that tracks the exchange rates from the underlying asset, which is the AUDUSD spot forex market rate.

If a trader wants exposure to the Australian dollar, then the AUD futures contracts are the ideal derivatives assets to trade.

Trading is conducted via the CME Group’s futures trading exchange. Trading opens on Sunday evening through Friday close of business, Chicago time. Thus, traders from around the world can participate in trading the AUD futures.

Besides the CME Group, Australian dollar futures contracts can also be traded at the Intercontinental Exchange (ICE).

To read more about the Australian dollar futures contracts, read below.

Australian dollar futures contract specifications

The table below summarizes the contract specifications for the Australian dollar futures contracts from the CME Group.

Contract Unit 100,000 Australian dollars
Min. Price Tick $0.0001 per AUD
Tick Value $10/contract
Ticker 6A (Globex)
Contract Months 3 months, March, June, Sep, Dec
Settlement Deliverable/Financially settled

Read more about the contract specifications here.

Australian dollar futures contract trading volumes

The Australian dollar futures attracts a reasonable trading volume within the currency futures market. On average, the daily volume traded on the Australian dollar futures contracts is around 80,000 – 100,000 contracts. The daily volume is slightly higher than the New Zealand dollar futures contracts.

Australian dollar futures contracts - Daily trading volumes (Source: CME Group)

Australian dollar futures contracts – Daily trading volumes (Source: CME Group)

Australian dollar futures contracts price

The Australian dollar futures are priced in U.S. dollars. Meaning that the price shown is the U.S. dollar equivalent for 1 Australian dollar. The prices for the Australian futures contracts are quoted in four decimals.

The image below shows an example chart of the Australian dollar contracts.

AUD Futures Price Chart

AUD Futures Price Chart

Australian dollar futures – Price discovery

The Australian dollar futures contracts tracks the price of the exchange rate from the underlying markets, which is the spot forex market. Price of the Australian dollar futures closely tracks that of the exchange rate prices. However, readers should know that with the AUD futures contracts, the prices also discount the overnight swaps or interest rates.

Because, the Australian dollar traditionally has a higher interest rate than that of the United States, one can expect this cost of carry or interest rate differntial to be automatically adjusted into the futures price.

Therefore, it is not uncommon to find two different prices on the spot and the futures market.

In terms of the margin requirements, trading the Australian dollar futures contracts requires as little as just $500 in margin to day trade the contracts. However, the moment you leave your AUD futures contract positions open overnight, the margin requirements increase significantly.

Besides the margin requirements, traders also need to post a maintenance margin as well.

Australian dollar futures contract months

The Australian dollar futures contracts trade on a quarterly cycle, just like most other currency futures contracts. At any point in time, three active contracts are in effect and can be traded.

But remember that trading the further out contracts can be risky due to the low liquid conditions in the market. The standard contract trading months for the Australian dollar futures are March (H), June (M), September (U) and December (Z).

Traders can hold their contracts to expiry date but in most cases, the retail futures broker is likely to liquidate the contracts prior to expiry. Those trading directly at the CME group exchange can also take delivery of the underlying contract, which is the Australian dollar.

In most cases the currency contracts for the Australian dollar are settled financially and closed prior to expiry.

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