It’s well known that currencies are closely linked to interest rates movements. The reason of this relationship is pretty simple: higher interest rates tend to attract foreign investment, increasing the demand and value of the currency. On the other hand, lower interest rates tend to be less attractive for foreign investment and decrease the currency's value. Currencies are traded in pairs, for example EUR/USD, AUD/CAD, EUR/JPY and so on. So, in order to visually see the relationship between interest rates and currencies you need to take the difference between the respective country’s bond yields and the ... (full story)