Types of currency pairs
Currency pairs are divided into three groups based on their characteristics in the market.
The most commonly traded pairs with the US dollar on one side are called the majors representing more than 60% of the daily FX trading volume. Majors are characterized by:
- Being very liquid,
- Having less volatility than other pairs,
- Being less vulnerable to manipulate,
- Involving low transaction costs
Major currency pairs
| Majors | Currency pair | Nickname |
|---|---|---|
| EUR/USD | Euro against the US dollar | Euro |
| USD/JPY | US Dollar against the Japanese yen | Gopher |
| GBP/USD | British Pound against the US dollar | Cable or Sterlingd |
| USD/CHF | US Dollar against the Swiss franc | Swissie |
| USD/CAD | US Dollar against the Canadian dollar | Loonie |
| AUD/USD | Australian dollar against the US dollar | Aussie |
| NZD/USD | New Zealand dollar against the US dollar | Kiwi |
Crosses
Currency pairs that do not involve the US dollar are called Crosses or minor currency pairs. They are riskier to trade than majors because of the characteristics they share:
- Being less liquid than majors.
- Being more volatile than majors
- Being vulnerable to manipulate
- Involving higher transaction costs than majors
Some of the most traded minor currency pairs
| Crosses | Currency pair |
|---|---|
| EUR/GBP | Euro against British Pound |
| EUR/JPY | Euro against Japanese Yen |
| EUR/CHF | Euro against Swiss Franc |
| EUR/CAD | Euro against Canadian Dollar |
| AUD/JPY | Australian Dollar against Japanese Yen |
| AUD/NZD | Australian Dollar against New Zealand Dollar |
| GBP/JPY | British Pound against Japanese Yen |
| NZD/JPY | New Zealand Dollar against Japanese Yen |
| NZD/CHF | New Zealand Dollar against Swiss Franc |
| GBP/AUD | British Pound against Australian Dollar |
Exotics
Exotics are the group of currency pairs that involve at least one currency from a small country or emerging economy. Exotics associated with higher risk as they are known as susceptible pairs to sudden economic and political changes. They are also featured by:
- Not being very liquid,
- Being very volatile compared to other groups,
- Being susceptible to manipulation,
- Carrying considerably higher transaction costs.
Some of the most exotic currency pairs
| Exotics | Currency pair |
|---|---|
| EUR/TRY | Euro against Turkish Lira |
| USD/TRY | US Dollar against Turkish Lira |
| USD/INR | US dollar against the Indian rupee |
| USD/NOK | US Dollar against Norwegian Krone |
| USD/DKK | US Dollar against Danish Krone |
| USD/ZAR | US Dollar against South African Rand |
| USD/THB | US Dollar against Thailand Baht |
| USD/SGD | US Dollar against Singapore Dollar |
| USD/SEK | US Dollar against Swedish Krona |
| USD/MXN | US Dollar against Mexican Peso |