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Now I am opening a long position of 1000000 USD on euro futures at a spot FX rate of $1.2568/€. Technically, this means that I am taking a credit of €795,671.55 (2dp) from my broker and immediately am exchanging that amount to 1000000 USD. Therefore, I now have 1000000 USD available in a virtual space but I owe my broker €795,671.55. Is this correct?

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This is a futures trade ? If so there are no payments of euros or dollars except for the payment (or receipt) of daily variation margin to the exchange via your broker. If this is CME futures those payments will be in USD and will represent the dollar gain or loss on your trade. This will be automatically debited and credited from your account.

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You dont owe your broker anything. It was a spot deal and you exchanged your USD for the EUR equivalent. When you want to convert it back to your account ccy (USD), you will then convert back the EUR for the USD at whatever the prevailing spot rate is.

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