I was looking at the forward curve for USD/EUR today for a model I am building for work and was curious, what drives it? In commodity markets it is interest rates, free storage space at certain locations, supply/demand balance, etc. but I am not familiar with FX.
| +13 | Delta One Trading | 6 | 13h | |
| +12 | Lateraling from Trading to IB vs. IB to Trading | 4 | 2d | |
| +11 | Loser on the trading floor - help please! | 3 | 2d | |
| +9 | Best macro desks | 2 | 3h | |
| +9 | AVP / AD Fixed Income Trader Salary | 1 | 3d | |
| +9 | SA class size in BB FO (IB, S&T, AM PB) | 3 | 1d | |
| +5 | Rest in Peace Jim Simons | 0 | 13h | |
| +4 | Understanding the Yield Curve | 2 | 5d | |
| +3 | What NOT To DO in S&T and Banking | 3 | 4d | |
| +2 | How Quantitative is Commodity Trading | 2 | 2h |
Career Resources
Get instant access to lessons taught by experienced private equity pros and bulge bracket investment bankers including financial statement modeling, DCF, M&A, LBO, Comps and Excel Modeling.
Short answer is interest rate differentials between EUR and USD. Think about it this way, FX forward curve basically reflects non-arbitrage forward exchange rate on the prevailing interest rate curves in EUR and USD. Ex. Selling EUR for USD spot aka borrowing EUR and lending USD for a certain amount of time should reflect what that forward exchange rate is, otherwise you would be able to arbitrage. It's the same idea in commodities just with storage + base interest rate.
Vero id ut assumenda voluptate consequatur labore optio. Dicta sit corporis incidunt vel nesciunt commodi quisquam.
Itaque ipsum asperiores perspiciatis esse aliquam. Repellendus saepe officiis at aut accusantium tempora laudantium.
Ducimus velit debitis magni ad. Est autem dignissimos ut est dolor in. Dicta quae tempore quia nisi non similique. Error facere excepturi ea quam aut.
Quam voluptatem sed pariatur dolorem. Alias provident quia eaque est vero et rerum. Quos blanditiis suscipit totam. Distinctio impedit accusamus qui veniam est aut eos.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...