The Commonly Traded Foreign Exchange Rate Currencies
While the forex market houses all of the currencies in the world there are certain currencies which are traded more. It is important that you know what these foreign exchange rate currencies are and why they are traded. When you know this you can determine whether or not they are the right currency for you to trade.
The US Dollar
The US dollar also called the greenback is possible the most commonly traded currency. Currency pairs with this currency in them are recommended to new traders because of the ease with which it can be traded. The US dollar is the standard currency for many commodity values like oil and gold. These commodity prices often affect certain currencies and the US dollar. When these commodities fluctuate there will be a fluctuation in the US dollar as well.
Another reason why the US dollar is commonly traded is the ease of fundamental access. It is very easy for a retail trader to get information on the US economy and the political policies of the country. It is very important that you are able it get all the information you can about the currency you are going to trade.
The Euro Foreign Currency Rate
The Euro is one of the world’s newest currencies, but is fast becoming one of the most important. The Euro is the currency of the European Union and is traded a lot by heavy hitters on the forex market making it very liquid. Most traders who look at the Euro are fundamental traders because this currency is one of the most ‘politicized’ currencies on the market.
The Euro is commonly traded on y retail traders because you can easily get information on the political state of the Eurozone. This information is what moves the currency the most and you can find it on any news website. You should also keep an eye on fundamentals like the interest rates in different countries and the debt situation. Of course, not all of these fundamentals will cause a movement that can be predicted.
The Japanese Yen
The Japanese Yen is the most commonly traded currency that comes out of Asia. In the forex market the Yen is commonly traded as part of carry trades. This is due to the low interest rate of the country. The Yen is often paired with high interest currencies like the US dollar and the Australian dollar. Many people believe that the popularity and inclusion of the Yen on the forex market is purely for carry trade purposes.
The British Pound
The British pound is one of the strongest currencies in the world. While the UK is a member of the European Union the pound is still used as the currency because of the strength. Many traders will use the Pound as a benchmark currency for other trades. This currency is also traded greatly on fundamentals of the United Kingdom economy and political state. If you are going to trade the Pound you should keep up to date with what the Bank of England is doing and the policies of the government. It is very easy to find information on this through the major new stations and websites.