In the financial world, exchanges happen every minute. Such transactions are a necessity due to the fact that different geological areas use different currencies. Some cities use the US dollar, and another uses the Euro, so on and so forth. And this prompts anyone moving from one location to another to do an exchange so that their cash is valuable wherever they are traveling to. In this piece, we shall look into the most traded pairs, but first, let us get a bit of background info on currency pairs.
Before we even get to the specific pairs, you first have to understand that for an exchange to take place, there has to be two commodities at hand. And in finance, you will be met by something like this: EURUSD currency pair. Do not fret because the dynamic is very simple. The wording EURUSD is one of the currency pairs known and consist of a base and a quote. The first currency, EUR, is the base, and the USD is the quote currency. And in every exchange, there is the quote price usually in form 1.2, for example. This number means that one Euro is equivalent to 1.2 US dollars, and this rate is used throughout every exchange.
The pairs are further divided into three categories, the major, commodities, and cross currencies. The major ones are the most traded in the market; the commodity is the ones paired with a product such as oil or fuel. And lastly, the cross currencies are the pairs that do not have the USD in them like the EUR/GPB.
The specific currency pairs
The EURUSD currency pair is by far the most exchanged one solely because they both represent the world’s two biggest economies, the European and the US markets. This pair falls under the major currency category since it amasses to 24% of daily forex exchanges, which is a considerable chank when compared to the rest.
The second most traded currency pair is the US dollar against the Japanese yen, which accounts for 13.2% of all daily forex exchanges. This pair, also known as the ‘gopher,’ is highly liquidatable since both currencies have a vast geographical cover in terms of usage.
This major currency consists of the Pound sterling and the US dollar. Also known as the ‘cable,’ this pair makes up of 9.6% of all daily forex exchanges. The quote price, in all currencies, changes according to how the individual markets are doing. This means if the British market is doing good, its value increases, and vice versa.
This currency pair is known as the Aussie, and it consists of the Australian dollar against the US dollar. This pair is traded at a percentage of 5.4. The value of the Australian dollar is, however, closely tied to the value of its exports, and if the prices are low, the value of the dollar goes up.
Lastly, we have the loonie on account that the appearance of a loon bird on the Canadian dollar coins. This pair falls fifth on the list with 4.4 % forex transactions on a daily.