Currencies are traded in pairs.
A currency pair is the quotation of the relative value of a currency unit against the unit of another currency.
The first currency of a currency pair is called the base currency, and the second currency is called the quote, or counter, currency
Currency pairs are written by concatenating the ISO currency codes (ISO 4217) of the base currency and the quote currency, separating them with a slash character.
- GBP -> base currency
- USD -> quote/counter currency
According to the average daily trading volume and to the liquidity we distinguish between:
Majors, Minors and Exotic Pairs.
The most traded currency pairs in the world are called the Majors.
They involve Euro, US dollar, Japanese yen, Pound sterling, Australian dollar, Canadian dollar and the Swiss franc.
The Majors are:
- EUR/USD - Euro/US dollar
- USD/JPY - US dollar/Japanese Yen
- GBP/USD - British Pound/US dollar
- AUD/USD - Australian dollar/US dollar
- USD/CHF - US dollar/Swiss franc
- USD/CAD - US dollar/Canadian dollar
These currency pairs have high liquidity and represent more than 80% of the total Forex volume.
The Minor Currency Pairs ("Minors”) consist of those currencies traded less actively than the Majors, although their economies are still significant and they also tend to be active in international trade.
The Exotic Pairs ("Exotics") are those pairs that are from emerging economies rather than from developed/industrialized nations.
- USD/TRY - US dollar/Turkish lira
- EUR/TRY - Euro/Turkish lira
- USD/ZAR - US dollar/South African rand
- EUR/ZAR - Euro/South African rand
- USD/CNY - US dollar/Chinese Yuan
- USD/INR - US dollar/Indian Rupee
- USD/MXN - US dollar/Mexican peso
- USD/SGD - US dollar/Singapore dollar
Currency pairs that are not paired versus the dollar are called "Currency crosses" or simply "Crosses". Pairs that involve the euro are often called "Euro Crosses".
- GBP/CAD - British pound/Canadian dollar
- GBP/CHF - British pound/Swiss franc
- GBP/JPY - British pound/Japanese yen
- GBP/NZD - British pound/New Zealand dollar
- GBP/AUD - British pound/Australian dollar
- CAD/JPY - Canadian dollar/Japanese yen
- AUD/JPY - Australian dollar/Japanese yen
- AUD/CAD - Australian dollar/Canadian dollar
- AUD/NZD - Aussie dollar/New Zealand dollar
- AUD/CHF - Australian dollar/Swiss franc
- NZD/JPY - New Zealand dollar/Japanese yen
- CHF/JPY - Swiss franc/Japanese yen
- EUR/CHF - Euro/Swiss franc
- EUR/JPY - Euro/Japanese yen
- EUR/GBP - Euro/British pound
- EUR/CAD - Euro/Canadian dollar
- EUR/AUD - Euro/Australian dollar
- EUR/NZD - Euro/New Zealand dollar
Currency Pairs/Currencies nicknames
Currency pairs and currencies are often referred to by nicknames by traders rather than their symbolic nomenclature.
These are some common examples:
*Table taken from Wikipedia (latest data can be obtained from the Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity,
Most traded currencies by value
Currency distribution of global foreign exchange market turnover