If you set up the equation as (F-S)/S, is it always positive = premium and negative = discount? For some reason, I always have trouble remembering if it is a premium or a discount. Like if spot for Y/$ is 110 and the 12 month forward is 120, is the yen trading at a 9.1% premium to the dollar and is the yen strong?
Dollar is a premium (it can buy more Y in the future)
That makes sense. So dollar is also strong against the yen right?