Minor Forex Pairs, Majors and Exotics
There are many currencies traded in the forex market.
Each currency is then paired along with another making a currency pair.
Currencies that are not paired with the US Dollar but consist of the Euro, the UK Pound and Yen are minor pairs. These are the three most traded currencies beside the US dollar.
Minor pairs have a smaller market share compared to major pairs. Because of this they can exhibit lower market liquidity. Lower market liquidity will mean that a broker will give wider dealing forex spreads.
There are fourteen minor forex pairs in total, although the amount can vary depending on the broker.
- EUR/GBP – Euro/British pound
- CAD/JPY – Canadian dollar/Japanese yen
- GBP/AUD – British pound/Australian dollar
- GBP/JPY – British pound/Japanese yen
- EUR/JPY – Euro/Japanese yen
- EUR/NZD – Euro/New Zealand dollar
- EUR/AUD – Euro/Australian dollar
- EUR/CHF – Euro/Swiss franc
- EUR/CAD – Euro/Canadian dollar
- CHF/JPY – Swiss franc/Japanese yen
- AUD/JPY – Australian dollar/Japanese yen
- NZD/JPY – New Zealand dollar/Japanese yen
- GBP/CHF – British pound/Swiss franc
- GBP/CAD – British pound/Canadian dollar
What Is A Major Currency?
As mentioned before, a minor currency pair consists of the three main currencies.
These currencies are euro, pound and yen.
Along with the U.S. dollar these make up 4 major currencies
They are very strong currencies from countries with a stable economy and government.
When paired against another stable currencies they become a minor pair.
The euro is the second most traded currency and the second most held reserve currency.
The main currencies traded with the euro are EUR/GBP and EUR/USD.
The euro makes up about 31% of daily trading volume.
Since its introduction in 1999 the euro took on the status as a major reserve currency.
Japanese Yen (JPY)
The yen is the third most traded currency and is the fourth most held reserve currency.
The main currencies traded with the yen are EUR/JPY and JPY/USD.
Yen makes up about 22% of daily trading volume.
The Japanese yen is often traded as a safe haven currency.
This means that the currency should remain stable during market turbulence.
Great British Pound (GBP)
The pound is the fourth most traded currency and is the third most held reserve currency.
The main currencies traded with the pound are EUR/GBP and GBP/USD.
The pound makes up about 13% of daily trading volume.
During the 19th century to the first part of the 20th century the pound was the primary reserve currency.
Other Types Of Currency Pairs
There are many currency pairs traded in the forex markets but some are more traded than others.
There are three classifications for currency pairs, exotic pairs, minor pairs and major pairs.
We will go through them below.
Major Currency Pairs
Major Pairs are the most traded currency pairs in the forex markets. These currency pairs all contain the U.S. dollar paired to either the Euro, the British Pound or the Yen.
Three of the most trade major currency pairs;
- EUR/USD – Euro/U.S. dollar
- USD/JPY – U.S. dollar/Japanese yen
- GBP/USD – British pound/U.S. dollar
Exotic Currency Pairs
Exotic pairs are currencies of emerging economies paired with major currencies. These pairs are not traded as often as the majors or minors currency pairs.
Some of the exotic pairs include;
- USD/HKD US Dollar/Hong Kong Dollar.
- USD/SGD US Dollar/Singapore Dollar.
- USD/SEK US Dollar/Swedish Krona.
- EUR/TRY Euro/Turkish Lira.