Hello everyone! Today we will touch upon an interesting and important topic of the forex market. There are enough opportunities in the world to trade currencies of all countries, but most of the trade volume is occupied by the main ones. Let's figure out which currencies are traded by traders more than others.
US Dollar
The most important currency on the planet is the US Dollar. There is nowhere without it: most of the operations on the market take place through the American dollar. In addition, the United States is currently the largest economy on the planet. A huge part of world trade is concentrated in the USA or occurs through the USA. The dollar itself is the reserve currency in the world, central and commercial banks hold large reserves of dollars in their accounts to make international transactions. Yes, Gold, Copper, Oil and much more are valued in dollars. Wherever you look, there is a dollar everywhere and everyone uses it.
Because of these factors, the dollar is No. 1 in terms of volumes with an average daily volume of 2.9 trillion US dollars.
Euro
The second largest trading currency in the world. The main reason is the scale of the economies of the countries that are part of the eurozone. Currently, the eurozone unites 20 countries. Countries such as Germany, France, Italy have quite large economies, in total, together with other European countries, the euro accounts for 20% of world reserves. The average daily volume is almost 1.1 trillion US dollars
Japanese Yen
Over the past decades, the Asian region has developed strongly. Countries improved and increased production, which eventually led to the fact that Asian countries are now of great importance in the global economy. Japan's manufacturing sector has a strong influence on the world and on the yen. Therefore, when export figures increase, the yen rises. The Japanese yen currently ranks third in terms of trading volumes in the world, with an average daily volume of 554 billion US dollars. Since China is a key competitor of Japan in the industrial goods market, the weakening of the Chinese yuan has a detrimental effect on the yen, because then the export of Chinese goods will become more attractive. In addition to China, the yen is also affected by the price of oil, since Japan is a major importer of this raw material.
Pound Sterling
The official currency of the United Kingdom and its Territories is the Pound sterling. The economy of the Kingdom is of great importance for the entire world economy, since England is one of the main financial centers of the world. In terms of volume, the pound sterling ranks fourth in the world with an average daily volume of almost 422 billion US dollars. The share of this currency accounts for about 4.5% of world reserves. The main indicator of the strength or weakness of the currency is the UK. The monetary policy of the Bank of England, the GDP of England has a strong influence on the currency. The exit of England from the European Union also had a strong impact.
It is the Pound Sterling that closes the four largest volumes of the planet. Then there are such currencies as the Australian dollar, Canadian Dollar, Swiss Franc, Chinese Yuan. All of them in total, of course, lose to the big four listed above, but these currencies also have sufficient volume, which makes it possible to trade pairs with these currencies quite profitably.
Volatility
Given the volume of a particular currency in the global economy, we can understand which currency pair will have greater volatility and which will not. If you are a trader who wants to make a profit quickly, then the EURUSD pair is suitable for you – the two largest economies in the world. Next comes – USDJPY. The economies of these countries are in first and third place, respectively, which means greater volatility. If you need something in between, then you should pay attention to such currencies as – AUDUSD, USDCAD, NZDUSD. These currencies are linked to the first economy of the world, which will give sufficient volatility, while the second currency in these pairs does not have a huge volume, so price movements will not be so dangerous for a conservative trader. You can also pay attention to pairs where countries with a smaller global volume are involved. Movement in these pairs will be slow and sometimes even boring, but definitely very safe.
Conclusion
Knowing which currency is strong on the world stage and which is not is very important for choosing a pair for trading. Knowing what affects a particular currency helps to understand the future price movement. Professional traders understand these issues and choose currency pairs suitable for their style. Beginners trade everything in a row.
Do not be lazy to study and then the profit will come to you.
Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩💻