By selling currencies whose country has a lower interest rate against currencies whose country has a higher interest rate, you can profit from the interest rate differential (known as a carry trade) as well as price appreciation.

Currency crosses offer many pairs with high interest rate differentials that are prime for these types of trades.

For example, take a look at the nice uptrend on AUD/JPY. If you had a long position on this pair, you would’ve made a hefty profit.

On top of that, the interest rate differential between AUD and JPY was huge.

From 2002 to 2007, the Reserve Bank of Australia had raised rates to 6.25% while the BOJ kept their rates at 0%.

That means you made profits off your long position AND the interest rate differential on that trade!