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The forex market is the most liquid and the most traded market in the world. For beginners, one of the very first steps to succeed is to gain familiarity with the most popular currencies traded in the forex market. In this article, we’ll talk about them and why they are so popular among traders.
The US Dollar
The US dollar, aka the greenback, is easily the most traded currency in the whole world. You can find the greenback in pair the most other major currencies, often serving as a middleman for triangular currency transactions.
A huge part of the US dollar’s popularity is due to the fact that it’s the world reserve currency, held by almost every central bank and institutional investment entity in the world.
The Euro
The euro is a relatively new addition the currencies in the forex market. It was introduced to the world market as the official common currency of the nations within the Eurozone (with the exception of the United Kingdom) on January 1, 1999, with banknotes and coins joining circulation three years later.
The euro is the second most traded currency, just tailing the greenback. Along with being the official currency of the euro zone, many other countries in Europe and Africa peg their currencies to the euro to stabilize exchange rates.
The Japanese Yen
The Japanese yen is obviously the most traded currency within Asia. Many market analysts and participants see the yen as the proxy for the underlying strength of Japan’s manufacturing export economy. The yen’s performance is relatively directly correlated to the Japan’s economy’s performance.
A lot of participants use the yen as a metric for the overall condition of the pan-Pacific region as well. They also take other economies like South Korea, Singapore, and Thailand into the equation although the currencies of these nations are traded far less heavily in the forex market.
The Great British Pound
The Great British Pound, aka pound sterling, ranks as the fourth most traded currency in the whole world. Also, this currency serves as another reserve currency because of its relative value against other currencies.
Even though the United Kingdom is officially a member of the European Union (until its “Brexit” in March 2019), it opted not to adopt the euro as its official currency for important reasons like the historic pride in the sterling and maintaining the control of interest rates.
The Canadian Dollar
The Canadian dollar is predominantly known as the world’s first and foremost commodity currency, meaning it moves in conjunction with commodity prices, especially crude oil, precious metals, and minerals.
Since Canada is a huge exporter of commodities, the Canadian dollar aka loonie is very sensitive to the movements in the underlying prices of those commodities. The Canadian economy and the loonie are also highly correlated with the economic health of the world’s largest consumer base, the United States, which is in high proximity to the Canada.
The Swiss Franc
Like its home country, the Swiss Franc is considered by many as a neutral currency. It is most popularly known as a safe haven within the forex market, largely because the Swiss franc moves inversely to more volatile currencies like the Canadian and Australian dollars, as well as the US Treasury yields.
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