MARKETS: FOREIGN EXCHANGE
Also know as Forex, FX or Currency
The foreign exchange (currency or forex or FX) market exists wherever one currency is traded for another. It is by far the largest financial market in the world, and includes trading between:
- large banks
- central banks
- currency speculators
- multinational corporations
- governments
- Other financial markets and institutions.
A 'currency pair', such as 'EUR/USD', depicts a quotation of two different currencies. The first currency in the pair is the base currency or transaction currency. The second currency in the pair is labeled quote currency, payment currency or counter currency. Such a quotation depicts how many units of the counter currency are needed to buy one unit of the base currency.
'Majors' are the most liquid and widely traded currency pairs in the world. They are:
- EUR/USD
- GBP/USD
- USD/JPY
- USD/CHF
- AUD/USD
- USD/CAD.
There are lots of abbreviations for currency pairs such as:
- AUD/USD = "Aussie"
- EUR/USD = "Euro"
- GBP/JPY = "Geppy"
- GBP/USD = "Cable"
- NZD/USD = "Kiwi"
- USD/CAD = "Loonie"
- USD/CHF = "Swissy"
- USD/JPY = "Gopher"
- USD/CAD = "Beaver"
