Forex trading – the most popular forex pairs to trade on.

The forex market is a vast, diverse patchwork of traders based around the world. From banks to private individuals, just about anyone can trade on forex pairs these days, with over $5.1 trillion turned over every single day.

But what is it that they are trading? To answer this we can turn the latest triennial survey from the Bank for International Settlements for a look at the most traded currency pairs.

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Forex Market Overview

 

The US dollar is the world’s dominant vehicle currency. USD was on one side of 88% of all forex trades in 2016. Meanwhile, the euro is becoming less popular. EUR is on one side of 31% of trades, down from 39% in 2010.

Trading in the most four most actively traded euro currency pairs – EUR/USD, EUR/GBP, EUR/JPY and EUR/CHF – has fallen since 2013, while trades with NOK and SEK have increased. The Australian dollar and Swiss franc have also seen their market share decline, while the Canadian dollar, Swedish krona, Norwegian krone and sterling have risen.

China’s renminbi overtook the Mexican peso to become the most traded emerging market currency. CNY is now the eighth most traded currency globally. The Korean won, Indian rupee and Thai baht have also enjoyed rising volumes.

By venue, the UK remains the most popular place to trade forex. Although it’s losing market share, Britain is home to 37.1% of over-the-counter foreign exchange turnover. The US is second with 19.4% of transactions, while Singapore and Hong Kong are catching up.

Most Traded Forex Pairs

 

EUR/USD – By far the most trade currency pair is the euro-dollar cross. It’s lost some market share but still accounts for 23% of all forex trades with over €1.1 trillion in daily average turnover.

USD/JPY – The next most traded pair is the US dollar and Japanese yen. USD/JPY accounts for 17.7% of trades, with around $900 billion transacted each day.

GBP/USD – Cable trades have increased as a percentage of the forex market in the last three years, with GBP/USD accounting for 9.2% of all currency trades. That’s worth $470 billion daily. Brexit volatility may mean trades have increased further since the survey took place in April.

AUD/USD – The Aussie cross represents 5.2% of the forex market with daily volume of $266 billion.

USD/CAD – Accounting for 4.3% of the market, $218 billion is transacted in this pair every day.

USD/CNY – The renminbi is rising and the yuan-dollar cross is now worth $192bn daily, or around 3.8% of the market.

USD/CHF – The Swissy is less important than it used to be, but still accounts for 3.5% of global forex trading volumes.

USD/MXN – Mexico’s peso plays second fiddle to the renminbi these days. This pair is now 2.1% of the market.

EUR/GBP – The first non-dollar pair – the euro-pound cross represents 2% of global forex volumes.