Quick question about FX futures pricing similarity

[DSRE]

Hey guys, was just wondering how come FX futures follow Spot prices so closely.

Seems to me like there's a simple answer, that I can't come to due to not understanding a certain concept or something. Are all futures within one product like this?

The main part that confuses me for example is that futures are prices in one month time. I was surprised when the charts look almost identical to spot.

Thanks.

 

[Sig]

Hey guys, was just wondering how come FX futures follow Spot prices so closely.

Seems to me like there's a simple answer, that I can't come to due to not understanding a certain concept or something. Are all futures within one product like this?

The main part that confuses me for example is that futures are prices in one month time. I was surprised when the charts look almost identical to spot.

Thanks.

Forex futures are mechanically linked by a no arbitrage relationship to spot and interest rates of the two currencies. They in no way reflect what investors think the price will be "in the future" as their name somewhat deceivingly implies. So yes, they follow spot exactly when you take into account the interest rate impact.