While dealing in FOREX market, the traders have to know the basics like which instruments or currencies are heavily traded in order to make a good profit from them. In spite of having all the currencies involved in FOREX trading, there are only a few currencies, which are widely traded in the market who control the trading. Hence if you are a trader and willing to invest in currency market then you must know which currencies are heavily traded in the market in order to make a huge profit on your investments. We have made a list of top 8 currencies in the FOREX market according to their trading volume and central bank popularity.
US Dollar is one of the most dominating and heavily traded currencies in the FOREX market, historically it was created, back in 1861, during the civil war. But again, it was reintroduced in the year 1913 by their central bank by Federal Reserve Act of 1913 to monitor the exchange rates and current happenings in the USA Economy as it has been one of the largest economies in the world.
Some of the economic factors contributes is GDP, Employment rate, CPI, earning power, business growth and investments that contribute and influence the currency market. FED (Federal Reserve System) is the main central bank, which is the controlling body of USD. It is the base currency and quoted against the currencies like JPY, AUD, NZD, GBP, EUR, etc.
Any currency pair quoted against the USD and have a higher trading ratio then the pair is said to be a “Major”. As per the data of 2015, the transactions in US Dollar accounts for more than 85% of total transactions as compared to 200% in the Global Foreign Exchange Market hence the currency remains at the top of our list.
The Currency, “EUR” happens to be second highest traded currencies in the FOREX Market, which is influenced and controlled by the monetary decisions and statutory power of the European Central Bank (ECB). The regulatory body ECB is also responsible for the price stability and current happenings of the EU Nations. Similar to USD, it can also be quoted against the currencies like USD, JPY or GBP. This is one of the important currency pairs viewed by the traders due to the high amount of fluctuations, It currently exists in 28 countries and hence it’s been one of the widely traded in the currency market, mostly preferred by traders in European and American Session
The JPY was second largest trading currency till 2013, but today it stands third in our list. The Japanese economy is considered as one of the powerhouse currencies in the FOREX due to the high amount of volatility and hence serves as the best choice for traders to make profit as, the average spread is much lesser compared to other currencies. One of the best time to trade in JPY is during US session because high amount of volatility takes place, from 8.00 to 12.00. American session is considered to be a hot zone in the market.
GBP is the most volatile currency in London market session can make a huge amount of profit or loss in no time. The currency “GBP” is governed by the Bank of England (BoE). While the currency has a very slow or no movement in Asian session. It is vastly monitored by the Monetary Policy Committee- (MPC) hence any major announcement is likely to impact the economy as well as the currency
Switzerland economy is considered to be bankers currency while it has one of the biggest banking governing body SNB (Swiss National Bank) and has both the ruling parties i.e. private as well as public. It is considered to be one of the safest currencies in the world, mostly used by hedgers for hedging purposes. Hence it is less volatile in nature. The Currency only shown a volatile movement during the European session.
It is mostly responsible for the commodity and oil trading and is governed by BoC that is respected worldwide for its efficient and effective risk management and mostly used for the fund and investment purposes. CAD is the exporters’ currency and hence it makes up-to the list of widely traded currencies.
Australian Economy is considered to be one of the best economies in the world due to geographical region. In last several years, it had been one of the best output currencies in the world, hence it is sometimes called as “Commodity Currency” As per the ranking, Australia is ranking in top 3 for production sector and is considered one of the strongest yielding currencies in today’s times.
NZD is governed by is the central bank and accounts for 4.1% transaction in the world. Normally this currency can give an average spread of 30 to 40 pips daily which is admired by the Future market traders as the New Zealand is becoming the financial economy in the world. RBZ offers the high rate of interest in the market, which a majority of focus in gold and silver commodity prices.
Foreword by:Dhruv Williams – Analyst / Associate Economist