Why do higher bond prices mean a stronger dollar?

I understand that if people keep buying bonds for safety, the bond prices will go up. But how does that correlate with currencies? My understanding is that interest rates affect the demand for currencies.

This only works for tresuary bonds. When people buy them for safety they need to convert whatever they have (EUR, AUD, JPY or whatever) to USD to buy those bonds, so when the prices go up it means more people are buying and a lot of the time that means people are buying USD.

Hope this helps,

Jeremy

High yielding, riskier currency, more return. Low yielding, less risk, less return. Low interest rates imply less demand for currency, vice versa. This all becomes a very large clusterfuck when the govt manipulates interest rates, however.

not necessarily....there are many endogenous variables in this equation

If people buy bonds for safety, then assuming those safe haven buyers are able to overwhelm the offers in the market, then they can push prices higher. If bond prices move higher, the bond yield falls.

When people buy bonds for safety, they could be converting foreign currencies into USD to buy the bonds. But they DO NOT HAVE To. Buyers of bonds can be foreign or domestic players.

It is entirely possible for the people who are bidding up bond prices to be very large domestic players, in which case they already have U.S. dollars and do not need to make any foreign currency transaction.

Interest rates do affect currencies, but there are different interest rates. There is the central bank official rate that is set by each countries central bank. Then there are the yields on the bonds.

It is entirely possible for a currency to fall a large amount because the central bank cuts interest rates, but the local bond prices get bid up a lot because the central bank is cutting interest rates making existing bonds more attractive.

when bond price fall, yield up, which means (in general environment) higher yield currency get boost.

Bonds= Lower Supply=Higher dollar. I'm not too sure about this concept. Is it right?