Regarding #2, futures are exchange-traded fwds, n'est-ce pas? Thus, wouldn't you agree that, if you trade the futures, you are, in fact, trading forward FX? Just for a guide, in CHFUSD 16Jun10 is arnd 8 fwd pts. That is, not so coincidentally, why CHFUSD spot is .9478, while the futures are trading at 94.86.
1) No parlay voo frawnsay. 2) Yes, I know that futures are a derivative of forwards that are a derivative of the cash. 3) Does the cash market "move" the futures or is it the other way around with currencies?
2) Futures are not derivatives of forwards, futures ARE forwards that are standardized and exchange-traded. Both are derivatives. 3) Let me put it to you this way. The <b>total</b> open interest in all CME CHFUSD futures contracts is 30,583, which is equivalent to a notional amt of arnd Sfr3.8bn. In contrast, the CHFUSD fx fwd mkt deals arnd Sfr14bn notional <b>daily</b> (using BIS and Bank of England estimates). So there's your answer. At the moment, the futures mkt is an irrelevant blip, compared to cash spot/fwd.
Right here, right now, the Swiss Franc cash (not the Globex Future) is the instrument I look at first. Wonderful correlations, and has a sturdy quality in terms of intraday cointegration that just can't be matched by the dollar or the euro. The SF correlated with energy, certain sovereign debt, and other flight-to-quality instruments. The SF usually leads the way and holds up under pressure.