Newbie type question

Discussion in 'Educational Resources' started by erd0c, Jun 26, 2007.

  1. erd0c

    erd0c

    What's the difference between financial futures (i.e. eurodollar) versus forex (i.e. USD/EUD) ?
    Conceptually, do they move in tandem?

    Thanks
    E
     
  2. MTE

    MTE

    Be careful when you say Eurodollar! Eurodollar is a US dollar deposit outside of the US, so it's a short-term interest rate product not a FX product.

    Euro FX, which also trades on the CME, is the futures contract on the EUR/USD currency pair.

    EUR/USD pair is the spot market while the Euro FX futures is the forward market. So while the two do move together the futures have a carry component and thus basis risk.