Every year the foreign exchange market is growing and becomes the most attractive market for traders. Everyday financial institutes and dealers are trading huge amount of currencies. There are several popular currencies that every forex market should acquainted, but the most traded currencies are:
1. US dollar. The USD is the most traded currency on the planet, because is held by every central bank and financial institute in entire world. You can find USD in foreign exchange market as a pair with all major currencies and also can be found as an intermediary in triangular transactions. As you can see USD is used as the standard currency and also is used in commodities transactions such as oil and metals. So, it’s important to understand that commodities have fluctuations in value due to economic principals of supply and demand and relative value of USD with prices sensitive to inflation witch affects USD.
2. Second most important currency is the Euro. New in this market, euro has become very fast the world’s most important currency. Euro is traded by speculators as a play on the general health of eurozone. This currency is often influenced by political events within the eurozone. This can large trading volumes for the euro. That’s way euro is the most “politicized” currency in this market.
3. Japanese Yen. This currency is the most traded currency out of Asia and it’s viewed by many as a proxy for strength of Japan’s export economy. In forex market Japanese yen is used as a carry trade, having zero interest rate policy, so traders used it to invest in other higher currency pocketing the rate differentials in this process.
4. The Great British Pound known as the pound sterling. Due to his EU membership, UK didn’t adopt the euro as it’s official currency. In 2016, UK decided to get out of EU, so the pound sterling had a bad instability. Because of this decision, UK lost the interest of traders.
5. The Swiss Franc is considered a safe currency due to the fact that the swiss franc tends to move in a negative correlation to many commodity currencies, such as Canadian and Australian dollar.
As we have seen every currency has a specific features that affects the market.