The Six Major Currencies
The US Dollar
The first currency which is the US Dollar dominates the world foreign exchange. It is the base or universal currency to evaluate and other currency traded on forex. Most commodities like metal and oil are denominated in US dollars. Because of this, any fluctuation in supply and demand have direct impact on the US dollar value. US dollar is considered a safe-haven currency. Most investors move towards the dollar when economic conditions fall
The Euro (EUR)
The Euro is the second most dominating currency in the forex market. The Euro has a strong international acceptance streaming from the members of the European Monetary Union. The Euro is used by 18 member countries of the EU. The forex transaction by the Euro is currently accounted for almost 37%. The main factors that influence the acceptance of Euro’s prices is often based on the economies of the developed countries that use the common currency.
The Japanese Yen (JPY)
In Asia, the Japanese yen is the most traded and dominating currency. It is the third most popular or traded currency. This currency represents almost 20% of the world’s exchange. The demand to trade the Yen comes mostly from the Japanese Keiretsu. The Japanese stock market and real estate market correlate with the volatility of the Japanese yen (JPY). The Japanese economy is mostly an industrial exports economy. Traders also considers the Japanese currency as a safe-haven currency when there are risk aversions.
The British Pound (GBP)
The British Pound is the currency of UK and is the fourth most traded currency internationally. The GBP is heavily traded against euro and the US dollar but has less presence against other currencies. 17% of all transactions are done through GBP in global forex market. The fundamental factors that affect the pound are as complex as the British economy and its influence. This currency is usually the alternative to euro especially when EU problems get too messy.
The Swiss Franc (CHF)
The Swiss Franc is the currency of Switzerland. The most popular exchange rate is the CHF/ERU pair. This is the only currency of a major European country that does not belong to EU nor G-7 countries. Despite the size of the Swiss economy which is relatively small, the Swiss franc is one of the four major currencies traded in the forex market. The CHF is also a safe-haven currency and investors move towards it during periods of risk aversion. The CHF prices depend on the central bank policy. The CHF tends to be more volatile compared to other major currencies due to lack of liquidity.
The Canadian Dollar (CAD)
The Canadian Dollar is a commodity driven currency. The main product of the Canadian economy is crude oil. With this, the prices are influenced by the price of crude oil. Global economic growth and technological progress help make CAD attractive to investors.
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Information on this page is solely for educational purposes only and is not in any way a recommendation to buy or sell certain assets. You should do your thorough research before investing in any type of asset. Learn to trade does not fully guarantee that this information is free from errors or misstatements. It also does not ensure that the information is completely timely. Investing in the Foreign Exchange Market involves a great deal of risk, resulting in the loss of a portion or your full investment. All risks, losses, and costs associated with investing, including total loss of principal and emotional distress, are your responsibility.