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