Quoting Currency Futures

How are currency futures quoted? Generally, in the foreign exchange market, currencies are quoted against the American dollar. For example, a rate of 1.67 Swiss francs per dollar means that it takes 1.67 Swiss francs to buy/sell 1 dollar. Of course, there are the exceptions to this rule, for example sterling. However, currency futures are priced in American terms, in that it quotes how many dollars it takes to buy one unit of foreign currency. They are the reciprocal of those used in the cash market. Thus a rate of 1.67 Swiss francs per dollar would be quoted in the futures market as 0.5988 dollars per Swiss franc (1 divided by 1.67), which means that it costs 60 cents to buy one Swiss franc. For each contract, there is a specific contract size, for example one Swiss franc contract is worth 125,000 francs, the Japanese yen is worth 12,500,000 yen, sterling is worth 62,500 pounds, while the euro is worth 125,000 euros.

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