Major Currency Pairs

Just like there are small investors and large investors, there are small currencies and large currencies. In general, currencies are “large” or “small” depending on how popular they are with investors and traders in the foreign exchange market.

The Seven Major Currencies

The majors are the seven currency pairs that dominate the market. At present, the majors are found in 85% of all currency trades, making them very important to the foreign exchange market.

These seven majors are:

EUR/USD – Euro vs. US Dollar
USD/JPY – US Dollar vs. Japanese Yen
GBP/USD – Great British Pounds vs. US Dollar
AUD/USD – Australian Dollar vs. US Dollar
USD/CHF – US Dollar vs. Swiss Frank
USD/CAD – US Dollar vs. Canadian Dollar
NZD/USD – New Zealand Dollar vs. US Dollar

You’ll notice that these currencies represent some of the world’s biggest economies; they’re the “majors” for exactly this reason. Also, each contains the US Dollar on one side of the pair—the US Dollar is the biggest currency in foreign exchange.

Remember when we talked about how Wal-Mart has to change the currencies it earns overseas into dollars to use them in the United States? Well, Walmart isn’t the ONLY company that has to do this; in fact, there are literally millions of businesses that make money in a different currency than they can use in their home office.

Knowing that there are many thousands of multi-national companies, we know that there are many businesses that have to trade their currencies for one another. Also, we can infer that the countries that are home to large, international businesses would also make up a greater portion of the total foreign exchange pool.

The majors make up a total of 80% of all the goods and services produced each year. They also make up 85% of all foreign exchange transactions.

As you can see, not only are the major pairs a very big part of the foreign exchange market, but they’re actually a proportionally larger part than the smaller, less popular currencies. After completing your studies here at ForexOnlineLearning, you’ll probably trade the majors. Get to know them well!