Most Popular Forex Pairs

The British pound also acts as a large reserve currency due to its historically high relative value compared to other global currencies. The U.S. dollar is one side of many popular currency pairs and is also a reserve currency, making it first and foremost in the world of currency trading. While there are EIGHT major currencies, there are only SEVEN major currency pairs. Crosses that involve any of the major currencies are also known as ” minors”. —also variously known as “parallel FX market,” “FX black market,” or “underground FX market”—is a major cause for concern to the monetary authorities in developing economies.

The US Dollar, Euro, Yen and the other popular currencies combine as pairs to make the Majors, as described earlier in the guide. 78% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money. As such, traders should keep an eye on the price of both Brent crude and US crude when trading USD/CAD, as any fluctuations in the oil market will likely reverberate in the exchange rate of this forex pair. USD/CAD is commonly called the ‘loonie’ on account of the loon bird which appears on Canadian dollar coins, and it represents the pairing of the US dollar and the Canadian dollar.

It is one of the most popular forex pairs in the world due to the prominence of the JPY throughout Asia and the USD worldwide. It boasts a high liquidity, meaning that traders can buy and sell the currency pair in large volumes without the price fluctuating too much in its exchange rate. It also has one of best free options trading course the tightest spreads in the forex market, reducing the overall costs of the trade. At CMC Markets, we offer both spread betting​ and CFD trading​ opportunities for over 300 forex pairs, including all major crosses. Please note that spread bets are only available for clients based in the UK and Ireland.

This is because a liquid market with supply/demand at every price level will ensure price action is smooth and gap-free. The Euro is the single currency of the European Union and the second most traded currency on the globe after the US dollar. Following the ISO4217 standard, currencies appear as three-letter codes, which tend to be formed from two letters that stand for the region, and one that stands for the currency itself. For instance, USD stands for the United States dollar and JPY for the Japanese yen.

For this reason, traders are confident in its economy, and the Yen is seen as a safe haven in times ofhigh volatility and uncertainty. The Euro is the 2nd most traded currency, and the 2nd largest reserve currency. The protests began a month or so before the data was collected, and so it is likely that they had an effect on the trading volume of USD/HKD. In part, this could be because the increased media buzz caused many traders and speculators to focus their attention on the Hong Kong dollar, with the assumption that its value would be affected by any news from the city.

Among interdealer trades, spot amounted to 60% of interdealer volume. Among trades with non-financial customers, forwards and swaps amounted to 53% of volume with non-financial customers (50% in the case of financial thinkmarkets review customers). Cross-border transactions accounted for more than half of total turnover, with transactions between a dealer located in the U.S. and a counterparty abroad accounting for 58% of total turnover.

June 2022 Market Wrap

The data for the following chart comes from a survey done every three years by the Bank of International Settlements . In the trading world, in general, safe havens also refer to currencies, commodities, and stocks. For example, Gold is considered a safe-haven commodity to trade as it has a long-term value. The results relating to the overall market remain unchanged, and the overall market figures are identical to those in the initial report.

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Hong Kong dollar HKD

Currencies are always traded in pairs because when you buy or sell one currency, you automatically sell or buy another. In every currency pair, there is a base currency and a quote currency – the base currency appears first, and the quote currency is to the right of it. Forex is the largest and most volatile market in the world with hundreds of currency combinations to choose from. To simplify things, here are the ten most traded forex pairs on the market. Turnover in HKD doubled between April 2016 and April 2019, taking the currency from 13th in the global rankings to ninth.

Is where participants come to buy and sell foreign currencies (e.g., foreign exchange rates, currencies, etc.). Foreign exchange trading occurs around the clock and throughout all global markets. It is the only truly continuous and nonstop trading market in the world, with participants trading day and night, weekday and weekend, and on holidays. It has also been described as the intersection of Wall Street and Main Street. There are four major currency pairs traded on the forex market, which are the most heavily traded.

The foreign exchange is the conversion of one currency into another currency. An exchange rate is the value of a nation’s currency in terms of the currency of another nation or economic zone. Was an official member of the European Union, the country never adopted the euro as its official currency for a variety of reasons, namely historic pride in the pound and maintaining control of domestic interest rates. The official currency of the majority of the nations within the eurozone, the euro was introduced to the world markets on Jan. 1, 1999, with banknotes and coinage entering circulation three years later. These pairs all contain the U.S. dollar on one side and are the most frequently traded. After a record 2021, global fintech funding is undergoing a correction, but Singapore and its Southeast Asian neighbours are contradicting the trend, according to a KGMP analysis.

However, the percentage of trading volume with non-financial customers has grown (to 17% from 14% in 1992). In contrast to the overall market, the volume of spot transactions in the brokers’ market rose to 67% from 56% in 1992 . The percentage of turnover going through the brokers’ market was slightly lower than the proportion of three years ago, and noticeably lower than during the 1980’s . The percentage of volume traded in the afternoon (12pm – 4pm) has grown (to 34% from 29% in 1992). Most trading still occurs in the morning, however, with almost twice as much volume in the morning than the afternoon (58% between 8am and 12pm, and 34% between 12pm and 4pm).

Most commodities and assets like oil and precious metals are traded against the US dollar. This makes them sensitive to fluctuations in the value of the dollar or exchange rate. The forex market is, therefore, highly influenced by news and economic data relating to the United States. The dollar is highly traded due to its widespread acceptance and increased global relevance. Coming in next as the second most traded currency is the Euro common currency.

This is due to Australia being a major exporter of commodities such as coal and iron ore. As a result, commodity prices and global demand strongly influence the price of the Aussie. According to the Bank for International Settlements, the Aussie Dollar is the 5th most traded currency in the world, mostly via the AUD/USD currency pair. With the global currency market landscape undergoing a transformation due to the prevalence of ultra-low interest rates, it will be interesting to see whether the Yen can maintain its safe haven status. According to the Bank for International Settlements, the Euro accounts for a daily average volume of upwards of $800 million. However, the fact they denominate volume in USD highlights the Euro’s number 2 status.

The most widely used currency in the world is the US Dollar

It is the largest, most liquid market in the world in terms of the total cash value traded, and any entity or country may participate in this market. The forex market is open 24 h a day, 7 days a week and currencies are traded worldwide among the major financial centers. In the past, forex trading in the currency market had largely been the domain of large financial institutions.

When you stop and think of all the companies, governments, banks and individuals that need foreign currency you start to understand the scale of it. The value of the Hong Kong dollar is pegged to the US dollar in a unique system known as a linked exchanged rate. The Hong Kong dollar is allowed to fluctuate within a band of HK$7.75 to HK$7.85 to US$1, and traders can take advantage of any price movements within this band. Traders should keep an eye on the US-China trade war as any developments are likely to affect the price of this currency pair.

Announcing policy at least eight times a year, the MPC decides on interest rates and broader monetary policy, with primary considerations of total price stability in the economy. As a result, knowing a little bit about forex, and thefundamentals behind it, can make significant additions to any trader, investor, or portfolio manager’s arsenal. Let’s take a look at eight currencies every trader or investor should know, along with thecentral banksof their respective nations. The Japanese yen is easily the most traded of Asian currencies and viewed by many as a proxy for the underlying strength of Japan’s manufacturing and export-driven economy. Exotic currency pairs are made up of one major currency paired with the currency of an emerging economy, such as Brazil, Mexico, Chile, Turkey, or Hungary. Exotic currency pairs consist of one major currency and one currency from an emerging market .

With Canada being such a large exporter of such commodities, the loonie often reacts to movements in underlying commodities prices, especially that of crude oil. The euro may be the most “politicized” most traded currency pairs 2020 currency actively traded in the forex market. Forex is the largest and most liquid market, with trillions of dollars traded between millions of parties around the globe each day.

Another Asian currency comes in next with the Hong Kong dollar at a 4 percent market share of currency trading transactions. This currency has doubled its market share from 2016 and is currently at its highest level in this report going back to 1989. The fourth most traded currency was the British pound sterling which totaled 13 percent of currency transactions in 2019. The pound also had a 13 percent share in 2016, up from a 12 percent share in 2013. The GBP saw its highest share of 16 percent in 2004 while the lowest amount was 9 percent in 1995.

Foreign Exchange Market and Interest Rates

The Yen, the official currency of Japan, is the 3rd most traded currency. Keep up to date with our news and analysis section of the website, which can provide insight and predictions into future movements in the forex market. Open a live account to start trading straight away or practice first with virtual funds on our demo trading account. To use individual functions (e.g., mark statistics as favourites, set statistic alerts) please log in with your personal account. Transactions do not not include physical exchanges of cash, or digital payments such as PayPal, Apple Pay, Alipay or WeChat Pay.

85% of Canada’s exports go to the US, while Canada imports about 50% of their goods and serves from the US. Some of Canada’s biggest are oil and timber, with one of the main factors influencing the Canadian Dollar’s value is the oil price. For this reason, the Canadian Dollar sits in a basket of currencies referred to as commodity currencies.

Japanese Yen Fact Sheet

Note that trading volume adds up to 200%, because each currency trade has a pairing. While more than half of turnover volume was transacted in the morning, the percentage of volume traded in the afternoon has grown. The smaller share of the USD in turnover volume was more noticeable in the brokers’ market than in the market as a whole.

In 2019, USD/CAD transactions made up 4.4% of daily forex trades.1 The strength of the Canadian dollar is closely linked to the price of oil because oil is Canada’s main export. Like with most other currency pairs, the strength of GBP/USD comes from the respective strength of the British and American economies. If the British economy is growing at a faster rate than that of America, it is likely the pound will strengthen against the dollar.

The decline of the share of brokered USD transactions was due to very little growth in volume of brokered transactions between the USD and currencies other than the DEM. For example, the volume of USD/JPY transactions in the brokers’ market remained constant at $13 billion daily. The foreign exchange market has continued to grow rapidly, though at a slower pace than during the 1980’s . The foreign exchange market has continued to grow rapidly, though at a slower pace than during the 1980’s. Foreign exchange or currency trading is also known as Forex to FX trading and is the interchange of one currency for another, and it is this exchange that separates currency trading from other asset classes.

This means that central and commercial banks hold it throughout the world for investments and daily transactions. Rounding out the top 10 is the New Zealand ‘kiwi’ dollar which comes in next with a 2 percent market share. The 2 percent level has been the kiwi dollar’s market share consistently since 2007 and also marks the highest total amount for the NZD in the history of this report. The Asian-Pacific island of New Zealand punches well above its weight as a forex trading center with a top 10 currency while sporting a population (4.8 million) that fails to crack the top 100 in the world.

IG International Limited is part of the IG Group and its ultimate parent company is IG Group Holdings Plc. IG International Limited receives services from other members of the IG Group including IG Markets Limited. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority.

Our gain and loss percentage calculator quickly tells you the percentage of your account balance that you have won or lost. Find the approximate amount of currency units to buy or sell so you can control your maximum risk per position. From basic trading terms to trading jargon, you can find the explanation for a long list of trading terms here. Where the price of the Australian Dollar tends to mirror fluctuations in iron ore due to Australia’s reliance on exports, the Canadian Dollar similarly mirrors the price of oil. The Brexit referendum has changed the global currency landscape for good. While the vote was held in 2016, it has taken years of political wrangling between the UK and Europe to get where we are now in 2022.

Neither OC nor any of its representatives are soliciting any action based on it and it does not constitute a personal recommendation or investment advice. Should you have any queries about the Information referred to on this site, you should contact your independent financial adviser. For information and support on currency trading, reach us at Ortega Capital. The second most popular pair is USD/JPY and represents approximately 13.2% of all daily Forex transactions. The currency of a country tells you a substantial amount about its economy as well as living standards of the people.

What are the Majors?

As a result, volatility can be experienced in these pairs if a deleveraging effect takes place. Otherwise, the currencies tend to trade in similar averages of 70 to 80 pips. Both currencies also maintain relationships with commodities, most notably silver and gold.

This means that Forex pairs that were once strong can depreciate following economic changes. However, there are some currency pairs whose value tends to remain stable or appreciated during times of economic instability. This Forex pair falls under the Majors category, and due to its high liquidity, it tends to be somewhat less volatile than other currency pairs. However, traders should be aware that even the most liquid instruments can become highly volatile under certain conditions.