Typically, we can tell that the quotation for two diverse types of currencies is known as the currency pairs. It is the actual amount that should pay in one currency for a unit of other currency. For example, when the traders are quoted USD/EUR to 2.25, that means they can exchange 1 dollar and receive 2.25 euro. If one’s value changes, it creates an impact on the overall retail market. If the quotation of USD/EUR goes for 3.25 another day, that shows USD has appreciated relative to the Euro.
Major currency pairs
This definition differs among the traders in Singapore. But most of the professionals often include the popular pairs in their business. These are USD/JPY, USD/CHF, EUR/USD, and GBP/USD. The cross pairs and the commodity currencies are also regarded as the major ones. Here are the major categories of those pairs. These pairs are used widely in Forex business.
GBP/USD- Pound dollar
USD/JPY- Dollar yen
USD/CHF- dollar swiss frank
These pairs represent the world’s largest economy. These are used for trading in high volume. Higher volume can tend to lead the smaller spreads. The most popular and widely used currency pair is EUR/USD. Its nickname is ‘Fiber’. From the recent analysis, we found that EUR/USD completes 24% of total transactions. It ensures that it can continue the trade at compact spreads. High volume can often lead to a reduced-price difference between the offer and bids.
Things that affect major currency pairs
The main issues that can affect the currency pairs are the interest rate by the central bank, politics, and economic data. Read more about the news factors from a professional. View website of Saxo to get the details. Soon, you will be able to protect your balance and take advantage of the key events. Let’s explore the key factors that can cause massive change in the market volatility.
The central bank can control the monetary policy and the financial stability. They can easily do this by influencing the interest rate. When the central bank increases the interest rate, it can cause the increased demand for the specific currency because the investors look for the higher yield, which can modify the value of different currency pairs.
Economic data can give a lot of vital information as it reflects the nation’s overall economy. Financial data can make an influence on employment data, retail sales, inflation rate, CPI data, gross domestic product, purchasing managers index and so on.
In the Forex market, the investors often use the smaller position in the higher volatile currencies and larger position on the less volatile currencies. Volatility can change the situation at any time. It strikes the pairs at any time for the changes in the rate of interest. Political instability and the economic outlook can also be changed due to the volatile situation. So, it is very important to follow the current market situation and news about the retail market.
Forex market is influenced by the political election, Corruption, scandals, trade wars and continuous changes in policies. The government has enough power to control the economy as well as the currency pairs. Political issues can influence the values of currency pairs.
Suggestion for trading the pairs
— The newbies should choose the liquid currency pairs like USD/JPY, or EUR/USD. After determining that they can analyse and practice the technical and necessary skills which are familiar to move the pair easily and quickly.
— Regulating the accurate leverage is the key element of trading. Excess leverage can wipe out the account. Many traders face this problem by using too much leverage.
— Interpersonal development and strategies can help investors to be disciplined and consistent. It can create more profit, and successful investors often follow this method.
— Choosing the best time frame is another way to suit the profession. You can easily select the day trading, swing trading and scalping based on the importance of the Forex market.