Foreign Trade Sector




D. Futures Market Based Estimates of the U.S.
Exchange Rate with Various Countries

The Futures Market for Currencies can be used to derive forecasts of the exchange rates of the U.S. Dollar against various major foreign currencies. For example, in the Friday, October 18, 1996 WALL STREET JOURNAL, p. C16 under the heading "Futures Prices" the following data concerning futures of th U.S./Deutschmark exchange rate can be found:

Deutschmark (CME) - 125,000 marks; $ per mark
OpenHighLowSettleChange
Dec0.65190.65320.64940.6504 -0.0019
Mar970.65990.65660.65370.6544 -0.0020
Jun0.65830.65830.65810.6583 -0.0020

From this report one can see that futures traders believe that in December the dollar to mark exchange rate will be trading in the range of 65.04 cents per mark, in March of 1997 in the vicinity of 65.44 cents per mark, and in June of 1997 about 65.83 cents per mark. The "change" column denotes the change in the futures "price" from the previous trading day, October 16, 1996. On October 17, 1996 the dollar was trading with the mark at the rate of 64.817 cents per mark.

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