New Zealand dollar futures contracts

By | May 14, 2017

The New Zealand dollar futures contracts are derivative contracts that tracks the underlying asset which is the spot FX price for the New Zealand dollar, NZDUSD. The New Zealand futures contracts trade under the ticker 6N on the CME’s Globex exchange.

For futures traders who want to take exposure to the New Zealand dollar, the Kiwi futures contracts as they are informally known is an ideal derivatives contract to trade.

The contracts trade on the CME’s Group’s exchange and is available for trading from Sunday through Friday starting at 5:00 p.m. through 4:00 p.m. Chicago Time which is then followed by a 60-minute break that starts at 4:00 p.m. Chicago Time.

Due to the fact that trading is enable almost round-the-clock, international traders who are not domiciled in the United States can also take advance of trading the New Zealand dollar futures.

To learn more about the New Zealand dollar futures, read below.

New Zealand dollar futures contract specifications

Below is the summary table of the key contract specifications for trading the New Zealand dollar futures contracts.

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

Read more about the contract specifications here.

New Zealand dollar futures contract trading volumes

The New Zealand futures contracts command a reasonable amount of interest, as seen by the average trading volume on a daily basis. The NZD futures volume chart below shows an average daily trading volume of around 20,000 contracts, which is reasonable.

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

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

New Zealand dollar futures price

The New Zealand dollar futures are priced in U.S dollar, meaning that the pricing is for 1 New Zealand dollar quoted in U.S. dollar. Therefore, when you see the price of 0.6830, this means that 1 NZD costs 0.6830 U.S. dollars. The chart below is an example of the New Zealand dollar futures price chart.

NZD Futures Price Chart

NZD Futures Price Chart

New Zealand dollar futures – Price discovery

The Kiwi futures contracts tracks the underlying price which is the NZDUSD exchange rate from the spot markets. The prices are adjusted automatically, although one can notice some discrepancy when it comes to the closing prices for the day. This is because the New Zealand dollar futures do not attract any overnight swaps.

Therefore, to make up for this, the futures markets already discount the swaps into the futures price, which explains the slight difference in pricing between the futures and the spot markets.

Depending on the futures broker that you trade with, the margin requirements may vary. However, for the most part, the margin requirements for day trading New Zealand dollar futures contracts is just $500. However, this changes significantly when you keep the positions open overnight.

In this case, traders have to maintain a maintenance margin of $1,400 according to the CME Group’s futures trading regulations.

New Zealand dollar futures contract months

The New Zealand dollar futures trade on a quarterly basis, with six contracts at any point in time. The contract months are March (H), June (M), September (U) and December (Z). Futures traders can hold the contract to expiry but in this case, the contract will have to be cash settled.

Day traders can comfortably trade the Kiwi futures contracts up to the last business day. The Kiwi futures contracts can be either settled physically for cash or can be financially settled by squaring off the contracts.

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