Wondering which currency to trade in the foreign exchange market! Here is a list of ten currencies that every trader must know.
10. US Dollar (USD)
United States Dollar is involved in about 85 percent transactions done in the foreign exchange market. Most of the open market operations are supervised by the country’s Federal Open Market Committee of the Federal Reserve System. Being the home denomination of the largest economy in the world, USD is a benchmark for trading against other currencies.
9. European Euro (EUR)
European Central Bank is the main body making decisions involving monetary policy. In addition, it issues banknotes and works towards price stability. EUR is a weaker currency in comparison to British pound or Australian dollar. On an average, the base currency trades between 30-40 pips on a daily basis.
8. Japanese Yen (JPY)
The Bank of Japan is the central bank to the second largest economy in the world. It governs the country’s monetary policies, money market operations, currency issuance and economic analysis. JPY offers a low interest rate and is pitted against high-yielding currencies like NZD and AUD. Average daily range is between 30-40 pips.
7. British Pound (GBP)
The United Kingdom’s main governing body is the Bank of England. It works on the monetary policies, with special focus on price stabilization. GBP, also called as pound sterling is a more volatile currency than Euro. It has the ability to trade a wider range per day.
6. Swiss Franc (CHF)
The Swiss National Bank is the governing body of Switzerland. CHF does not make significant moves in the individual sessions just like the Euro. The currency is generally pitted for the London session.
5. Canadian Dollar (CAD)
The country’s main governing body is the Bank of Canada. It focuses on its goals of safe and secure currency, stable inflation, and management of government funds efficiently. CAD trades in the similar daily range of 30-40 pips. The currency has an interesting relationship with the crude oil. Since Canada is the major exporter of crude oil, traders use the currency as a hedge against commodity position or for pure speculation.
4. Australian Dollar (AUD)
The Reserve Bank of Australia supervises the monetary policies of the country. It focuses on economic strength and price stability in the economy. AUD offers the highest interest rate in global exchange market. This currency maintains a relationship with commodities like gold and silver.
3. Hong Kong Dollar (HKD)
Due to British’s occupancy in Hong Kong, there was no local currency until 1863 when silver dollars of the country were declared as legal tender. Today, the Hong Kong Dollar holds 2.4% share in the daily transactions.
2. Swedish Krona (SEK)
The Swedish Krona holds 2.2% share in the daily foreign exchange market. It is the currency of Sweden since 1873. The Central Bank of Sweden is responsible for the country’s monetary policies.
1. New Zealand Dollar (NZD)
NZD holds 1.6% share in the daily currency transactions. The currency was introduced in 1934. Later, the governing body called the Reserve Bank of New Zealand was created for the country’s monetary policies. Like AUD, New Zealand Dollar also maintains a relationship with gold and silver.