Are you looking for a currency pair to trade in the Forex market? Here are the top 5 most used currencies in Forex Trading.
The United States Dollar (USD)
The United States is considered the world’s largest economy and its currency is known as U.S Dollar (USD). The currency is supported by the economic fundamentals which include the gross domestic product (GDP) employment and manufacturing reports. But despite its strong connection, the US dollar remains to be highly influenced by interest rate policies and the central bank. The USD is the point of reference against the other major currencies including the British pound, Japanese yen, and Euro.
European Euro (EUR)
Compared to its colleagues such as the Australian dollar and British pound, Euro is much slower. On a regular day, the base currency can go to 70-80 pips and the percentage in point as well. It also produces more volatility around 100 pips wide a day. Time is another trading consideration of EUR. Since the market is open 24/7, it is wise for traders to set schedules for FX trading.
Japanese Yen (JPY)
Japanese Yen (JPY) is mostly traded under the carry trade component. Although it is offering a low-interest rate, JPY has been pitted when faced with high-yielding currencies such as the Australian dollar, New Zealand dollar, and British pound. This has resulted in the underlying currency being too erratic, forcing traders to perform long-term technical perspectives. If you want to trade this currency, you must focus your attention on the crossover of U.S and London hours (around 8 a.m. to 12 noon EST).
British Pound (GBP)
British pound (GBP) is sometimes called pound sterling or cable. It is a currency being traded throughout the day. British pound can accommodate as much as 100 to 150 pips and it won’t be common to see it going down to 20 pips. The swings happening in the market make this currency volatile in nature with traders mostly focusing on currency pairs such as the British pound/Swiss franc and British pound/Japanese yen. Because of that, GBP is known as the most volatile among the rest of the currencies in the market.
Swiss Franc (CHF)
Totally unique against other currencies, the Swiss National Bank is known as the governing body associated with public and private ownership. The Swiss National Bank is known as a corporation that is under special regulation. Meanwhile, the Swiss franc and Euro are known to have a very unique relationship. Just like the euro, the Swiss franc also shows very small moves. The average daily range of this currency is 45 pips.
Canadian Dollar (CAD)
Canadian Dollar, also referred to as the loonie is another major currency frequently used in Forex trading. Trades under this currency ranges from 50 to 100 pips every day. One aspect of CAD that’s not present to others is its relationship with crude oil. As a matter of fact, Canada is a country known to be a major exporter of the commodity, resulting in lots of traders as well as investors using the currency for speculation or its current commodity position.