In 2022, as the Federal Reserve continued to raise interest rates and the risk aversion caused by the war between Russia and Ukraine, much of the world's capital returned to the United States, and the dollar index continued to rise, rising nearly 20 percent this year, a 20-year high.

As the leading international currency, the US dollar is so powerful that there is tremendous depreciation pressure on the currencies of other mainstream countries. As of October 26, 2022, for example, the euro fell more than 11 per cent against the dollar, the pound fell more than 14 per cent against the dollar, the yen fell more than 21 per cent against the dollar, and the offshore renminbi fell more than 12 per cent against the dollar.

With the rise in interest rates, interest rates on US Treasuries have also risen all the way, with the yield on the 10-year Treasury note exceeding 4%, the highest since 2008. Treasury prices are usually inversely proportional to Treasury yields, with 10-year Treasury futures falling 15% during the year.

In the fourth quarter of 2022, the Fed's rate hike came to an end, and the trend of exchange rates and government bonds came to a crossroads. Next, will the dollar continue to appreciate, or will it start to turn as interest rate increases slow? What is the trend of interest rates on treasury bonds?

The answer to this question remains to be given by the market in the future, and investors may have their own judgment. However, many investors may not know that Futu investors can also directly seize the opportunities through some investment products to judge the future trend of foreign exchange and US bonds. Such products include foreign exchange futures and interest rate futures.

Understand foreign exchange futures and interest rate futures

We know that futures means that buyers and sellers agree to settle a specified quantity of spot subject matter at a specified time, price and other trading conditions by signing a contract. When the subject matter is foreign exchange or US debt, it is called foreign exchange futures or interest rate futures.

The leading market for global futures trading is CME Group Inc. The mainstream foreign exchange futures include Japanese yen futures, euro futures and dollar futures, while the mainstream interest rate futures include 10-year US debt futures, 5-year US debt futures, 2-year US bond futures and so on. Each futures variety has a different monthly contract according to the delivery month. Among them, the month contract with the most active trading is generally called the main contract.

Futures trading is generally margin trading, with multiple leverage. Compared with the stock market, the foreign exchange market and the government bond market are relatively less volatile, so the leverage ratio is usually higher. For example, if the contract value of a yen futures contract is 12.5 million yen, the initial margin required by the exchange is $3927 and the yen / dollar exchange rate is 0.0069, then the leverage ratio is 125000000000.0069max 3927mm, and the required margin ratio is less than 5 per cent.

Lower margin ratio and higher trading leverage mean that when the foreign exchange market or treasury bond market fluctuates greatly, if the trading direction is correct, you can fully seize the opportunity to obtain higher returns with lower margin, otherwise, you will suffer a larger loss.

How to invest in foreign exchange futures and interest rate futures

In Fortune, investors can trade foreign exchange futures and interest rate futures in the same way as stocks.

Go to the market page, find the futures label, and you can find all the futures that support trading on the rich road.

Among them, American foreign exchange futures and interest rate futures are the most active. The foreign exchange futures that can be traded on the rich road include the main contracts of euro, Japanese yen, sterling and so on. Interest rate futures include the main contracts of 2-year, 5-year and 10-year Treasuries.

Before participating in trading, you need to open an additional futures account, which can be opened in a few simple steps.