Why buys EUR/AUD to pay interest for holding them overnight?

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oem7110
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Why buys EUR/AUD to pay interest for holding them overnight?

Post by oem7110 » Wed May 08, 2013 8:33 am

Due to different in interest rate, AUD's rate is higher than EUR's rate.

Buying EUR/AUD, you need to pay interest for holding overnight.
Selling EUR/AUD, you are receiving interest for holding overnight.

In a logical sense, everyone should sell EUR/AUD for extra interest for holding overnight.

Does anyone know any market behavior on why EUR/AUD rises instead of falling down in market price? On the other words, people are willing to hold EUR/AUD by paying extra interest for holding them overnight.

Does anyone have any suggestions?

Thanks in advance for any suggestions

sluggo
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Post by sluggo » Wed May 08, 2013 4:21 pm

It sounds like you may be talking about Forex rather than Futures Markets.

Buyers and sellers of EUR/AUD futures contracts don't pay or receive overnight interest. Check out the contract description and contract specifications at the exchanges where these futures contracts trade:

(link to EUR/AUD futures contract "EAD" at CME)

(link to EUR/AUD futures contract "KRA" at ICE)

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