I am currently trying to compute the P&L of a FX swap and to understand it's implications.
Let's say when we sell 1M EUR spot eur/usd at 1.08 and at the same time buy a one month month forward eur/usd at 1.10. Then the net cash flow would be + USD $ 16,835. I have a few questions on this.
1.) Is this a P&L gain ?
2.) If it is, is the gain due to the interest carry of swap points as USD has a higher interest rate than EUR ?
3.) If I want to enter a speculation fx swap trade that the EUR interest rate will increase in one month versus the USD interest rate, then should I enter a fx swap to buy eur/usd at the near leg and sell EUR/USD opposite at the far leg ?
Thank you for your help and appreciate your explanation.