Quote:
Originally Posted by DOOM@ALL_CAPS
Just to make sure, I understand this correctly:
This moment the EUR/USD is 1.2279.
Name Bid Ask Avg. (avg isn't quoted, my calc)
1W FWD 0.1300 0.1800 0.1550
2W FWD 0.3600 0.4600 0.4100
3W FWD 0.6600 0.7800 0.7200
1M FWD 1.2000 1.3000 1.25
Does this mean that if I were to draw a forward curve, I would have these points:
Time rate
0 1.2279
1W 1.2279 + .001550 =1.22945
2W 1.232
3W 1.235
1M 1.240?
My problem is that I find it weird that the market expects the USD to depreciate relative to the EUR, all things considered (Euro crisis)? Or is this because of the uncovered interest parity relationship and perhaps the US interest rate being higher?
Or am I just interpreting forward points the wrong way (should I perhaps subtract them instead?)?
Last edited by PNHH; 07-17-2012 at 09:06 AM.