Glossary · Fundamentals & economics
Interest rate differential
The gap between two countries’ interest rates. Changes in expected differentials are one of the most powerful long-run drivers of exchange rates.
Related terms
Carry trade
Buying a high-interest currency against a low-interest one to earn…
Central bank
The institution that sets a country’s interest rates and monetary…
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The return on government bonds. Shifts in the gap between two…
Commitment of Traders (COT)
A weekly CFTC report showing how futures traders are positioned.…
Consumer Price Index (CPI)
The main measure of inflation. Higher-than-expected CPI tends to…
Currency intervention
A central bank or government buying or selling its own currency to…