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The US Dollar is the most frequently traded currency in the world. As a result, most currencies are quoted against it. However, different types of currency pairs are used when referring to Forex trading, each of which is split into groups depending on the amount of trading activity and liquidity. These are known as majors, minors (or crosses), and exotic pairs.
Major currency pairs
The most traded currency pairs in the world are called the majors. They are generally the most liquid and attractive to all types of Forex traders. The EURUSD is the most traded pair, representing nearly 30% of all daily Forex trades on the entire Forex market.
Currencies not classed as major currencies but are normally traded against a major currency are called minor currencies and crosses.
PAIR CURRENCIES COUNTRIES EURUSD Euro/US Dollar Eurozone/United States GBPUSD British Pound/US Dollar United Kingdom/United States USDJPY US Dollar/Japanese Yen United States/Japan USDCHF US Dollar/Swiss Franc United States/Switzerland USDCAD US Dollar/Canadian Dollar United States/Canada AUDUSD Australian Dollar/US Dollar Australia/United States NZDUSD New Zealand Dollar/US Dollar New Zealand/United States
Minor currency pairs and crosses
Currency pairs that do not contain the US Dollar are known as ‘crosses’. A currency pair involving a major non-US Dollar currency would also be known as a ‘minor currency pair’.
The most common crosses are pairs derived from the three major non-US Dollar currencies – Euro, Great British Pound, and Japanese Yen. For example, pairs that involve the euro are called ‘euro crosses’. Below is a list of Euro, Pound, Yen, and other crosses.
EURO CROSSES
EURGBP Euro/British Pound EURCHF Euro/Swiss Franc EURAUD Euro/Australian Dollar EURCAD Euro/Canadian Dollar
GBP CROSSES
GBPAUD British Pound/Australian Dollar GBPCAD British Pound/Canadian Dollar GBPCHF British Pound/Swiss Franc GBPNZD British Pound/New Zealand Dollar
YEN CROSSES
GBPJPY British Pound/Japanese Yen EURJPY Euro/Japanese Yen CHFJPY Swiss Franc/Japanese Yen CADJPY Canadian Dollar/Japanese Yen AUDJPY Australian Dollar/Japanese Yen NZDJPY New Zealand Dollar/Japanese Yen
OTHER CROSSES
AUDCAD Australian Dollar/Canadian Dollar AUDNZD Australian Dollar/New Zealand Dollar AUDCHF Australian Dollar/Swiss Franc CADCHF Canadian Dollar/Swiss Franc NZDCAD New Zealand Dollar/Canadian Dollar NZDCHF New Zealand Dollar/Swiss Franc
Exotic currency pairs
Trading exotic pairs offer exposure to a wide range of developing and emerging market economies across Asia, the Middle East, and Africa. In general, exotic pairs are not traded as often as majors or crosses, which means they are not very liquid markets and lack consistent market activity.
There are often pros and cons associated with trading exotic currency pairs. Because they are not so widely traded, they can often be subject to higher trading fees; however, when the market moves, they can be subject to wild price fluctuations (suitable for the more experienced trader).
Below is a list of some of the main currency pairs referred to when talking about exotic pairs.
PAIR CURRENCIES COUNTRIES USDSEK US Dollar/Swedish Krona United States/Sweden USDNOK US Dollar/Norwegian Krone United States/Norway USDTRY US Dollar/Turkish Lira United States/Turkey USDMXN US Dollar/Mexican Peso United States/Mexico USDZAR US Dollar/South African Rand United States/South Africa USDPLN US Dollar/Polish Zloty United States/Poland USDSGD US Dollar/Singapore Dollar United States/Singapore
Nicknames
In Forex, many currency pairs (especially the majors) have particular nicknames which are commonly used in the market. Many even have an exciting story about why they were nicknamed that in the first place. For example, the FX pair GBPUSD is called ‘cable’.
This dates back to the 19th century when a communications cable ran across the Atlantic Ocean floor to get the exchange rate between the US Dollar and the British Pound.
In some cases, the currency by itself is known by a different name. For example, the US Dollar is often referred to as the ‘greenback’, while you may hear the British Pound referred to as ‘sterling’.
Below is a list of the most popular currency pair nicknames.
CURRENCY PAIR NICKNAME
GBPUSD Cable EURUSD Fiber EURGBP Chunnel USDCAD Loonie AUDUSD Aussie NZDUSD Kiwi GBPJPY Guppy EURJPY Yuppy USDCHF Swissy
Currency codes
Currencies are often abbreviated to a three-letter currency code. The first two letters symbolize the country’s name, while the third is the country’s currency.
Let’s look at a few examples.
GBP – ‘GB’ stands for Great Britain, while the ‘P’ stands for Pound
USD – ‘US’ stands for the United States, the ‘D’ stands for Dollar
JPY – ‘JP’ stands for Japan, the ‘Y’ stands for Yen
In trading, you will hear a lot about ‘pips’ and ‘spreads’. Learn about pips in Forex and how different factors can influence spreads.
