The main trading currencies in the foreign exchange market

The essence of foreign exchange trading is the exchange of currencies of different countries. However, since the currencies of all countries are not freely convertible, the currencies traded in the foreign exchange market are mainly convertible currencies, mainly including US dollar (USD), Euro (EUR), Japanese yen (JPY), British pound (GBP), Australian dollar (AUD), Swiss franc (CHF) and Canadian dollar (CAD). According to the statistics of the Bank for International Settlements, in 20 13 years, the trading share of these seven major currencies accounted for 173.7% (since each currency involves a currency pair, the total is 200%).

The US dollar is the global hard currency and the main currency for international payment and foreign exchange transactions. In global foreign exchange transactions, the trading volume of US dollars is around 85%. The political, military and economic status of the United States in the world determines the core position of the US dollar in today's world monetary system.

In the foreign exchange market, investors have to know the dollar index. The US dollar index is a comprehensive index reflecting the change of the US dollar exchange rate in the international foreign exchange market. It is calculated by the weighted geometric average of the exchange rates of six major international currencies, and is used to measure the strength of the US dollar. The weights of these six currencies in the US dollar index are: euro 57.6%, yen 13.6%, pound 1 1.9%, Canadian dollar 9. 1%, Swedish kronor 4.2% and Swiss franc 3.6%. The US dollar index is calculated with reference to the weighted geometric average 1973 of the exchange rate changes of more than a dozen major currencies against the US dollar in March, and its value is measured with 100.00 as the benchmark. For example, the quotation of 80. 18 points means that its value has depreciated since 1973 19.82%. By observing the dollar index, we can have a clear understanding of the general direction of the dollar. If the US dollar index rises, it means that the US dollar appreciates against other major currencies; On the contrary, it means that the dollar has depreciated relative to other major currencies.

When analyzing the trend of the US dollar exchange rate, many factors need to be comprehensively considered, the most important of which is the real interest rate of the US dollar. The real interest rate of US dollar refers to the real rate of return after deducting the inflation rate from the yield of one-year US Treasury bonds. The rise in the real interest rate of the US dollar has attracted overseas funds to invest in US dollar assets, thus contributing to the appreciation of the US dollar.

The euro is the second largest reserve currency in the world, and its trading volume in the foreign exchange market is second only to the US dollar. The euro is the most weighted currency in the US dollar index, which can basically be regarded as the rival currency of the US dollar. If the euro is strong, the dollar is weak. If the euro is weak, the dollar will strengthen. Therefore, investors can refer to the exchange rate changes of the euro to judge the strength of the US dollar exchange rate.

The pound was once the most widely used currency in international settlement business. Although it is no longer the glory of the past, due to historical reasons, Britain's financial industry is still very developed, and the pound still occupies a considerable position in foreign exchange transactions. According to the statistics of the Bank for International Settlements, the transaction share in 20 13 years is 1 1.8%. Since both the British pound and the euro are European currencies, the exchange rate fluctuation of the British pound is closely related to the euro.

Australian dollar is the abbreviation of Australian dollar, which is a typical commodity currency. Australia is an export-oriented country. Because of its advantages in the international trade of industrial products such as coal, iron ore, copper, aluminum, wool and cotton textiles, the trend of the Australian dollar is usually strongly influenced by the price trend of these commodities. In addition, like Australia, the Canadian dollar is also a commodity currency, because commodity exports occupy an important position in Canada's GDP.

The Swiss franc is a traditional safe-haven currency, mainly because Switzerland is a well-known neutral country. Therefore, in the event of global economic or political turmoil, people will put money into the Swiss franc to hedge, thus promoting the strength of the Swiss franc. In addition, since gold and Swiss franc are safe-haven assets, when the price of gold rises, the Swiss franc usually follows suit.

Foreign exchange transaction is to convert one currency into another, so the quotation of foreign exchange rate must include a pair of currencies, which are usually the basic assets of foreign exchange derivatives. The exchange rate between the domestic currency and the benchmark currency is called the base exchange rate. Since the US dollar is the central currency of the foreign exchange market, all countries basically use the US dollar as the benchmark currency, and set the exchange rate with other currencies by setting the exchange rate with the US dollar (that is, the cross exchange rate). The so-called direct order in the foreign exchange market refers to the basic exchange rate, and the cross order is the cross exchange rate. At present, the most important direct exchange currency pairs in the foreign exchange market are Euro/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD, etc. The most important cross currency pairs include GBP/JPY, GBP/CHF, EUR/JPY, EUR/GBP and GBP.

In the foreign exchange market, the exchange rate is usually expressed in five digits, such as: Euro/USD = 1.3603, which means that 1 Euro can be converted into 1.3603 USD. If the number goes up, it means that the euro appreciates against the dollar. If the number drops, it means that the euro has depreciated against the dollar. Another example: USD/JPY = 10 1.29, which means that 1 USD can be converted into10/.29 JPY. If this figure rises, it means that the yen has depreciated against the dollar. If the number drops, it means that the yen has appreciated against the dollar. Therefore, the exchange rate can be understood as the value of the former currency 1, and the latter currency represents the former currency.

In foreign exchange transactions, we usually hear the concept of "point". The so-called "point" refers to the smallest unit of exchange rate change, that is, the last digit change of exchange rate. If EUR/USD changes from 1.3603 to 1.3604, it means that EUR/USD has risen by one basis point; EUR/JPY changed from 137.78 to 137.77, which means that EUR/JPY fell by one basis point.