backwardation of 6E v eurusd

Discussion in 'Forex' started by Wallace, Mar 13, 2011.

  1. currently about 17/18 pips lower on the new June contract
    for instance at 6:40pm pst: 6E 1.3918 v spot 1.3935

    "Backwardation is the name for the condition that the market quotes a lower price
    for a more distant delivery date, and a higher price for a nearby delivery date."
    http://en.wikipedia.org/wiki/Normal_backwardation

    "Good bull markets should always and everywhere see contangos narrow and
    eventually should see contangos disappear and backwardations develop." - Dennis Gartman
    and from attached pdf
    "Markets can move to a backwardation when and only when demand outpaces
    supply. A backwardated market is simply the term structures way of forcing a
    storable commodity out of storage in order to meet rising demand. Indeed, it is
    a general rule amongst grain traders to "Never sell a backwardated market," for
    the backwardation speaks loudly of strong demand."