Posts Tagged ‘AddBroker Trading’

More on Currencies - some more info

By admin on April 3rd, 2009

Commodity Currencies
In general terms, commodity currencies refers to currencies of countries that rely heavily on commodity exports for a major share of their export income. Commodities refer to Gold, Silver, Tin, Aluminum, nickel, Copper, Oil, Gas, minerals, wheat and grain and anything that is needed as a raw material for manufacturing. According to the International Monetary Fund there are 58 countries which are included here. In Forex trading, commodity currencies usually refer to the Australian Dollar, Canadian Dollar and New Zealand Dollar.

Major Currency Pairs or Major Pairs
Historically, the Forex is centered around the USD which means that for any currency exchange process the first step has to be a conversion into the Dollar. This process was established during the Bretton-Woods conference after the second World War which took place in Bretton-Woods New Hampshire and was responsible for setting up the current global economic system. We will get into Bretton woods at a later date.

It is probably why in common Forex trading forums talking about currency pairs often specifically refers to any pairs which includes the USD. In the opposite, “cross currency” refers to any pairs which do not include the USD.

Knowing this, we can figure that a major pair is one of seven of the seven most liquid pairs: EUR/USD, USD/JPY, USD/CHF,GBP/USD, AUD/USD, NZD/USD and USD/CAD.

Commodity Pairs

As was described above, this term refer to three of the seven most liquid currency pairs: AUD/USD, NZD/USD and USD/CAD. Obviously this classification relate to the definition of commodity currencies.

Cross Currency
This term refers to any pairs which doesn’t include the USD. Cross currencies simplify the process of exchanging currency without any need to first convert it into USD.

Currency Pairs Nickname
Some currency pairs have their own nicknames. Such as:

Cable for GBP/USD
Euro for EUR/USD
Geppy for GBP/JPY
Loonie for USD/CAD
Kiwi for NZD/USD
Swissy for USD/CHF
Gopher for USD/JPY
Beaver for USD/CAD

Just a last quick fact, the term Cable was given to GBP/USD for a reason that in the old time the synchronization of GBP/USD rate between the London and New York markets were transmitted through a trans-Atlantic cable (a wire running under the Atlantic Ocean).