History

Currency futures were invented in 1970 and first used by the International Commercial Exchange in New York City. However, due to the fact that the Bretton Woods system of monetary management using pegged exchange rates was still in effect, currency futures did not become popular until two years later. In 1971, the United States abandoned the gold standard. This officially ended the Bretton Woods system due to the fact of the dollar having no backing. Many other countries followed suit and established floating market currency systems, increasing the popularity of currency futures by 1972.

In 1971, Australia moved from their traditional Bretton Woods peg against the U.S. dollar to a rate that fluctuated against the U.S. dollar. In 1974, Australia began to weigh the exchange rate of their currency against the trade weighted index in an effort to avoid high fluctuations with U.S. dollars. However, Australia moved to a true float in 1983. Shortly afterward, currency futures involving Australian dollars began to attract investors.