The most traded currencies in the forex market

The Euro is the third most common currency in the Japanese forex market. It is involved in 9.9% of trades and has a daily turnover of $74.6 billion.84BOJ, 2019 Central Bank Survey of Foreign exchange and Derivatives Market Activity”, accessed July 1, 2020. The USD/EUR currency pair accounted for 27% of the market’s average daily turnover.56Federal Reserve Bank of New York, “The Foreign Exchange and Interest Rate Derivatives Markets”, accessed June 30, 2020. The USD/EUR pair, popularly called Fiber, is the most traded on the forex market – accounting for 24% of trades in 2019. This marks an increase from 2016’s share of 23.1%.40BIS, “Triennial Central Bank Survey”, accessed June 29, 2020.

The story of modern Forex trading begins with the gold standard. Adopted by various countries around the world in the late 19th and early 20th century, the gold standard guaranteed the value of national currencies. Any note could be converted into a certain amount of gold. Globalization, travel, and the Internet made it easier for people to invest in other countries. Though all currencies serve their purpose, there are ten currencies that are more popular than others. They are used for different reasons, and a basic understanding of these currencies can help you better comprehend other types of currency as well.

Firstly, the US is the world’s largest economy and a powerhouse in international trade. The Japanese yen’s share has declined from 21.6% in 2016 to 16.8% of global forex trades in 2019. The decline in the yen’s trading volume has largely been attributed business secrets from the bible summary to the contraction in USD/JPY trades amid low volatility. The yen’s average daily trading volume is around $554 billion. Japan is one of the world’s leading exporters of manufactured goods. Every forex trade involves two currencies, or a currency pair.

The second most traded currency in the world is the Euro

At the time, it was pegged to the value of gold. It is popular to buy the Swiss franc during times of economic hardship because it is considered a stable currency. Today the Swiss franc is usually exchanged with the Euro, US dollar, and British pound. The New Zealand dollar is the official currency of New Zealand, the Pitcairn, Cook, Tokelau, and Niue islands, and it is most often exchanged for Australian dollars or US dollars.

Access to the Community is free for active students taking a paid for course or via a monthly subscription for those that are not. Please speak to a licensed financial professional before making any investment decisions. The yuan internationalization index reached 5.02 at the end of 2020, a sharp increase of 54.2 percent from the previous year, making it No.3 among international currencies. The Tokenist Media LLC. All rights reserved. Bitcoin.com, «$8.8 Trillion Traded in Cryptocurrency Spot and Futures Markets in Q1», accessed July 1, 2020. Yahoo Finance, «Top 10 Cryptocurrencies by Market Capitalisation», accessed July 1, 2020.

Among all the major traded currencies, the US Dollar is the most traded currency. The dollar’s current number one status is under contention though. Countries such as China and Russia feel a new one-world currency, one not backed by any one nation, is overdue in this increasingly integrated global economy.

The U.S. dollar also may be widely accepted in other nations, acting as an informal alternative form of payment, while those nations maintain their official local currency.

Forex trading costs

Understanding the factors that move a currency is a pivotal step in becoming a savvy participant in the forex market. The U.S. dollar, the euro, the yen, the British pound, the loonie, and the Swiss franc are major currencies to watch. The U.S. Dollar is the dominant currency in foreign exchange markets. Measured by volume, the eight most common currency pairings involve the U.S. dollar. The U.S. dollar is the dominant currency in forex markets. The euro, Japanese yen, Australian dollar, Canadian dollar, and British pound are also actively traded currencies.

By that time, the dollar had already become the world’s dominant reserve currency. But, unpegging the dollar from its value in gold created stagflation. That’s a combination of inflation and stagnant growth. By the early 1970s, countries began demanding gold for the dollars they held. Rather than allow Fort Knox to be depleted of all its reserves, President Nixon separated the dollar from gold. Some governments invest their reserves in foreign currencies.

Cryptocurrencies have already had an effect on the foreign exchange market, and will continue to have an ever-increasing role as the years go by. We likely won’t see cryptocurrency trading become a part of mainstream investing for another couple of years – at least until the market develops new technologies and becomes much more regulated. Other currencies account for 9.7% of trades, and their joint turnover adds up to $72.6 billion.86BOJ, 2019 Central Bank Survey of Foreign exchange and Derivatives Market Activity”, accessed July 1, 2020. The British pound is found at either side of 3.4% of trades in the Japanese market. Its turnover amounts to $25.9 billion.85BOJ, 2019 Central Bank Survey of Foreign exchange and Derivatives Market Activity”, accessed July 1, 2020. The Australian Dollar is the second most popular currency – accounting for 52% of trades.73AFXC, “Foreign Exchange Turnover Report”, accessed June 30, 2020.

Most Popular Forex Pairs

​​ is open 24 hours a day, from Sunday evening until Friday night, which takes advantage of the international time zone differences of London, Tokyo and New York. This allows currency traders to open and close positions at any time throughout the day without the time restrictions that exist in other markets, therefore forex market hours​​ are considered more flexible. With the carry trade being such a large part of the yen’s presence on the international stage, the constant borrowing of the Japanese currency has made appreciation a difficult task. For instance, a short-term trader will focus on the most traded currency pairs with the tightest bid/ask spread.

The Japanese Yen comes in at third place, with 16.8% of all trades involving this currency. However, the Japanese Yen’s share has dropped 5% in the last three years.31BIS, “Triennial Central Bank Survey”, accessed June 29, 2020. The most popular trading platform is still the classic MT4, which is used by 85% of traders. The second most popular platform is the MT5, which is used by only 6% of traders.16Forex School Online, “Forex Statistics & Trader Results From Around the World”, accessed June 28, 2020. 45% of traders spend 1-2 hours each day trading, while only 14% spend more than 6 hours per day.14Forex School Online, “Forex Statistics & Trader Results From Around the World”, accessed June 28, 2020. 41% of traders average between 9 and 20 trades each month.13Forex School Online, “Forex Statistics & Trader Results From Around the World”, accessed June 28, 2020.

The second-largest global broker is the XM Group, with an average daily trading volume of $13.4 billion.24Wealth&Value, “Largest Forex Brokers in The World 2020”, accessed June 29, 2020. Foreign exchange trading, or forex trade, is a lucrative business that involves the exchange of currency between millions of people, businesses, and entities. Transactions can be as simple as exchanging a few dollars for local currency during travels. Likewise, forex can be as complex as investing in large businesses or depositing money in foreign bank accounts. The British Pound the oldest currency globally that is still in circulation. It is also the third most popular reserve currency , plus the fourth most traded currency.

XE explains that the British pound was Australia’s official currency until 1910 when the country created its own currency, the Australian pound. The former currency was pegged to the British pound, and the country switched to the Australian dollar in 1966. Because of its high value and stability, it is now the fifth most popular banknote to exchange. The value of the AUD made it a target for counterfeiters, so the Australian government designed notes made of polymer in 1988 to reduce the likelihood of counterfeit production. This is New Zealand’s official currency that is issued by the Reserve Bank of New Zealand.

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During the Omicron variant’s outbreak, the Yen hit its 1-month low. The Canadian Dollar has the name Loonie in the world of Forex trading, which is the name of the Canadian one-dollar coin, which has an image of a common bird in Canada, the loon. The Canadian Dollar is closely correlated with the US Dollar, by virtue of the fact that their economies are very closely tied to each other as neighbours. 85% of Canada’s exports go to the US, while Canada imports about 50% of their goods and serves from the US.

European currency Compared to the dollar or the British Pound; the Euro is a slightly underperforming currency. The currency can fluctuate between pips during the trading day or up to 60 pips on the most volatile days. The Tokenist strives to bring you the most up-to-date, fusion markets review accurate, and reliable information from reputable sources. In an effort to maintain such a high standard, we use and share the primary sources which support our work. These can include data compiled by governments, original reporting, interviews with specialists, and more.

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Switzerland is one of Europe’s most productive and stable economies, with the Swiss Franc, also backed up by large gold reserves. The Swiss have resisted converting to the Euro, or even joining the EU. The stability of the Swiss Franc is one of the reasons, alongside its traditional neutral positive with respect to global conflicts, that makes the Swiss Franc another safe haven currency.

As one of the most valuable and most traded currencies in Africa, the Zambian Kwacha is the local currency of Zambia, a landlocked country in South Africa. As diverse as the African continent and her countries are, so are the currencies which see high daily volumes of trade. This information has been prepared by IG, a trading name of IG US LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion.

According to BIS’s 2019 triennial survey, trading in FX markets reached an incredible $6.6 trillion per day in April of 2019. Now, Forex trading is popular in a number of jurisdictions. There are a number of regulated forex brokers in the United States, and several other leading countries as well. All of a sudden, the barriers that prevented your average Joe from giving Forex trading a try were gone. While the US Dollar is the most used currency in the world, there are other major currencies which are prominent in the world trading market. The Euro wasn’t introduced to the world markets until January 1, 1999; However, it has quickly grown to be the second most traded currency today.

The worth of the entire global forex trading market is estimated to approximately $2.4 quadrillion – in other words, around $2409 trillion.1BIS, “BIS Quarterly Review”, accessed June 24, 2020. After WW2, a new system was put in place with the Bretton Woods agreement. The US dollar was pegged to gold, at a fixed rate of $35 per ounce. The dollar became the world’s reserve and reference currency – and other national currencies were fixed to the dollar. The yen is a major reserve currency, and it is often traded against the USD. The Euro is the second–most traded currency in the world and the official currency for 19 European countries.

When trading commodities such as gold, their tradable markets are priced in US Dollars, you can see this in action on your forex trading platform by opening up an XAU/USD market. The US Dollar is the most traded currency in terms of daily average volume. According to the Bank for International Settlements, the USD has a daily trade volume of $2.2 trillion. This means that while there is a chance of maximising profits, there is an equal chance of losses, as traders are only required to place a percentage of the full trade value, known as a margin requirement.

The risks of loss from investing in CFDs can be substantial and the value of your investments may fluctuate. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. The Japanese yen is the most active of the Asian currencies, due partly to the popularity of the carry trade.

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Next to the US Dollar, the South African Rand, Nigerian Naira, and others, the Kenyan Shilling is one of the most traded currencies in Africa. The Egyptian Pound trades at around 15.66 EGP for 1 USD. Egypt is a famous Arab nation which has been in existence since the biblical times. Egypt is famous for its pyramids and the Egyptian pound, as the local currency, is one of the most valuable in Africa. These countries include Ecuador, Panama and El Salvador, among others. An exchange rate is the value of a nation’s currency in terms of the currency of another nation or economic zone.

In the region, transactions do not exceed pips per day; sometimes they reach a maximum of 150 pips. Usually, the currency is mostly traded business intelligence forex in London and the United States. The European Central Bank is the financial institution that coordinates the 15 countries in the Eurozone.