Introduction to European Fundamentals | Episode 16: The Relationship Between Long-Term Interest Rates and Currencies [Miko Matsuzaki]

Miko Matsuzaki Profile

Matsuzaki Yoshiko. Began her trading career at Sumitomo Mitsui Banking Corporation Tokyo Branch. Moved to the UK in 1988, and in 1989 joined the Dealing Room at Barclays Bank London Head Office. Gave birth in 1991. In 1997, she transferred to Merrill Lynch Investment Bank in London City. Subsequently retired in 2000. Now, in addition to FX trading, she delivers European-origin information to individual investors in Japan through blogs, seminars, and YouTube. Her books include “Miko Matsuzaki's London FX” and “London FX That Always Makes Money” (both published by Jiyu Kokuminsha). Since 2018, she has run the “Fundamentals College.” She also started an online salon on DMM titled “FX Etiquette.”

Blog:http://londonfx.blog102.fc2.com/
Fundamentals College:https://fundamentals-college.com/
Online Salon:https://lounge.dmm.com/detail/1215/

※ This article is a reprint/edited version of an article from FX攻略.com January 2021 issue. Please note that the market information written in the text may differ from the current market.

Leveraging Long-Term Rates in Forex Trading

Long-term interest rates are determined not by central banks, but by the investors who buy that country’s government bonds and by other countries’ central banks that purchase them as part of their foreign exchange reserves. In other words, long-term rates are like a popularity vote for each country’s bonds, as explained in last month’s column.

So how can we utilize long-term rates in forex when even central banks cannot control them?

If you have traded FX for several years, you may have heard things like “The US long-term rates rose, so the dollar strengthened,” or “USD/JPY rose with US long-term rates.” Indeed, the USD/JPY pair is highly influenced by US interest-rate trends, and it is said that “USD/JPY and US long-term rates are correlated.”