Cash rules the world with its applications in all the fields of work. Assets are the reason why people keep putting effort into building a better reputation and career. Plenty of currencies are being used across the globe to pay for goods and services. However, it is only a few that make it to the top of the market. Forex trading is conducted across multiple platforms to exchange one currency for another, where the deal is made in pairs. The value of trade will be dependent on the market conditions from where the respective currency hails. Only the economically stable currencies are needed in sufficient quantities in currency trading. Of all the currencies available for trade, the American dollar is under the highest demand owing to the size of the US economy. Let us take a closer look at currency pairs and their working.
What are Currency Pairs?
Currency pairs can be defined as the coupling of national currencies from two countries. This is done to aid in the trading of currencies on the foreign exchange marketplace. Exchange rates are not fixed for the currencies; they keep differing based on the market conditions. All forms of forex trading take placed through these pairs, be it buying, selling, or speculating. Almost every country’s currency can be traded, but only the pairs are consistent in the high value. The most-traded currencies in the market are the US dollar, the euro, the Canadian dollar, the New Zealand dollar, the Japanese yen, the British pound, the Australian dollar, and the Swiss franc. Every primary currency pair contains the USD. One of the major currency pairs that remain highly valuable almost always is the EUR/USD. Some of the other major pairs include:
- USD/JPY: Pair containing the US dollar and the Japanese Yen.
- USD/GBP: Pair containing the US dollar and the United Kingdom pound.
- USD/CHF: Pair containing the US dollar and the Switzerland currency.
- USD/CAD: Pair containing the US dollar and the Canadian dollar.
- AUD/USD: Pair containing the US dollar and the Australian dollar.
- NZD/USD: Pair containing the US dollar and the New Zealand dollar.
The minor currency pairs are the less frequently traded ones with major currencies paired against each other without the USD. These pairs include EUR/CHF, EUR/GBP, and GBP/JPY.
Exotic pairs are the next category, all about pairing a major currency with one from an emerging or burgeoning economy. Some of the most common exotic pairs are USD/PLN (Polish zloty), EUR/CZK, and GBP/MXN (Mexican peso).
The least common type of currency pair is the regional pair classified by regions such as Australasia and Scandinavia. AUD/SGD, AUD/NZD, and EUR/NOK are some of the regional pairs.
Most Commonly Traded Currency Pairs
The forex market has listed around 18 currency pairs as the major players in the trade. These commonly traded currency pairs are: