Forex is the most open and the most liquid market in the world, with trillions of dollars being traded by millions of traders around the globe every day. The forex market exists as the largest and most engaging market in the world, and is expanding year by year.
Here are some of the most popular currencies for trading forex.
1. United States Dollar (USD)
The US dollar (USD) is the official currency of the United States of America. USD is the most traded currency across the globe, representing an average trade volume of more than $3 trillion on a daily basis. The primary reason behind its popularity and reputation is that the US is the world's biggest economy and a force to be reckoned with in the global trade. Also, the USD is considered as the world's underlying 'reserve currency', that is held by central as well as commercial banks for universal exchanges and speculation. It is assessed to make up to approximately 63% of currency conserves by volume. Furthermore, there are numerous commodities estimated in dollars that includes gold, oil, copper, etc. The price value of USD is influenced fundamentally by the US economic achievement and commodity demand.
2. Euro (EUR)
The euro, which is the official currency of the European Union (EU), is the second most traded all around, representing an average trade volume of almost US $1 trillion daily. The money is issued by the European Central Bank (ECB). The reputation of the euro is fundamentally based on the Eurozone, which includes 19 of the 28 nations within the European Union. The Euro is considered as the second-largest reserve currency in the world, calculated to make up approximately 20% of global reserves by volume.The value of Euro is unequivocally affected by political and monetary improvements inside the zone.
3. The Japanese Yen (JPY)
The Japanese Yen is the standard currency of Japan, issued by the Bank of Japan (BoJ). The currency is termed as the third most traded currency in the world, that accounts for an average trade volume of 5 billion USD on a daily basis. It is also the third most prominent reserve currency that makes up around 4.9% of the global currency reserves. Its price value is exceptionally reliant on the strength of the nation's economy, especially the manufacturing sector.
4. The Great British Pound (GBP)
The Great British Pound, which is also called as the Pound Sterling, is the official currency of the United Kingdom and its territories. The Great British Pound is considered as the fourth most-traded currency in the globe with a daily average volume of more than US$4 billion. The currency also serves as the fourth largest reserve currency, which accounts for about 4.5% of global reserves by rate. Even though the United Kingdom was an established part of the European Union, the nation has never embraced the Euro as its national currency for several reasons.The value of GBP mainly depends on the nation's economic movements, the Bank of England's (BoE's) monetary policies, employment reports, etc.
5. The Canadian Dollar
The Canadian Dollar is the standard currency of Canada, issued by the Bank of Canada (BoC). The currency accounts for an average of more than 2 million USD on a daily trade volume. The currency holds 2.02% of global reserves by value and is estimated as the fifth most held reserve currency globally. The United States is the primary trading partner of Canada, which accounts for more than 75% of Canada’s export and more than 50% of the imports. Therefore, the fluctuations in the US economy significantly affect the price of the Canadian Dollar.
6. Swiss Franc (CHF)
The Swiss franc is the standard currency of Switzerland, issued by the Swiss National Bank (SNB). The CHF currency is being considered as the seventh most globally traded currency that accounts for around 2 billion USD daily average volume. The currency also holds 0.18% of global reserves by currency value which is the eighth-most commonly held reserve currency. The Swiss Franc is considered as a safe haven in the currency market, as it aims to move against than more volatile commodity currencies, such as the CAD or AUD. However, the value of CHF is influenced by the Euro and the economic activities of nations within the Eurozone.
Conclusion
Each currency has its own distinct features that influence its underlying value and price changes compared to other currencies in the forex market. Knowing the factors that influence a currency in the market matters the most in currency trading. The above discussed are just a few currencies that are popular to trade forex. There are several other currencies available that traders can rely on each with their own set of influencing factors, risk and reward. Proper research into each currency is a minimum to have a better chance in making positive trades.