As with most other currency pairs, the strength of USD/GBP comes from the respective strength of the American and British economies. If the British economy is growing at a faster rate than that of the US, it’s likely the pound will strengthen against the dollar. The exchange rate of EUR/USD is determined by a number of factors, not least of which are the interest rates set by the European Central Bank (ECB) and the US Federal Reserve (Fed). The currency with the higher interest rates will experience an increase in demand because higher interest rates give a better return on an initial investment. If, for instance, the ECB had set higher interest rates than the Fed, it is likely that the euro would appreciate relative to the dollar. With hundreds of currency combinations to choose from, forex is the largest and most volatile market in the world.

• The currency with the higher interest rates will experience an increase in demand because higher interest rates give a better return on an initial investment.
• As in previous years, the EUR/USD retained its dominance in the forex market, placing first in terms of average daily trading volume.
• The South Korean economy has grown during the first decades of the 21st century to become the fourth largest in Asia and the tenth largest in the world – measured in terms of nominal GDP – as of August 2021.

The US dollar generated $3.46 trillion in daily swap turnover on average for a 45.4% share. Swaps with a seven-day maturity or less accounted for around $2.5 trillion of the overall trading volume for this instrument. This goes to show short-term swaps remain the most popular option among market participants looking to hedge their risk and increase their forex liquidity.

The yen is the third most traded currency, mainly in exchange for dollars and euros – it most traded currency pairs 2020 represents 20% of the world’s exchanges. Demand for Japanese yen derives primarily from Japanese companies repatriating their commercial profits. The yen is therefore sensitive to the profitability of these companies and to the real estate market. Other important factors for the USD are the United States’ trade balance and its national debt. Typically, an increase in the trade deficit and growing national debt reduce the attractiveness of the US currency.

Forex Market Hours and Trading Sessions

The COVID-19 pandemic appears to have significantly impacted trading activities, leading to a spike in both net operating income and the number of active clients for IG and CMC Markets in 2020 and 2021. The GBP has shown remarkable stability, maintaining a nearly constant share of 12.9% in both 2010 and 2022, while nearly doubling its OTC turnover amount. Data from 2010 to 2022 provides a snapshot of how the landscape has evolved. The USD has consistently maintained its dominance, seeing a slight uptick over the years. On the other hand, the EUR has experienced a decline, albeit still holding a significant share.

However, USD/CHF still accounted for 3.9% of all daily forex transactions in the triennial survey, up from 3.4% in 2019. At CMC Markets, we offer both spread betting and CFD trading opportunities for over 300 forex pairs, including all major crosses. Below is a list of five of the most traded currency pairs in the world, which is organised according to current economic data, spreads and margin rates. They combine to form around 2,500 currency pairs but a select few dominate the market in terms of demand, liquidity, and turnover. The EUR/USD pair reigns supreme, ranking first in daily trading volume (22.7% in April 2022) and market share, followed by other majors involving the US dollar. The most recent data shows the global foreign exchange market is worth $2.73 quadrillion, up from $1.93 quadrillion in 2019, making it the largest financial market globally.

Canadian dollar (CAD)

The evolution of global liquidity, marked by shifts in bond, dollar, and Emerging Market Economies (EME) shares, plays a significant role in shaping the forex trading industry. These changes not only influence currency values but also redefine trading dynamics and opportunities within the market. FXSI is a domain operated by Zivalea (Pty) Ltd, an authorised Financial Service Provider and is regulated by the South African Financial Sector Conduct Authority (FSCA), (License No. 54231). Investors should take cognizance of the fact that there are risks involved in buying or selling any financial product.

Hong Kong dollar (HKD)

The strength of the Chinese renminbi can also have an effect as China is a key competitor in manufactured goods. A weak renminbi can make China’s exports more competitive internationally, reducing demand for Japanese products and, in turn, the yen. Finally, it is worth noting that the cost of oil can play an important role in determining the yen’s value. This is because Japan is a major importer of oil and high prices can weigh heavily on its economy. After examining the top performers in the forex market, we figured it would be interesting to turn our gaze to the other side of the spectrum and have a quick look at some of the least traded currencies in the forex market.

How to Calculate Cross Rates in Forex

• Before you invest, you should consider whether you understand how options and futures work, the risks of trading these instruments and whether you can afford to lose more than your original investment.
• The narrow band means that the pair showed unnatural stability throughout 2020 and early 2021 – a period during which the Covid-19 pandemic caused extreme volatility in many other currencies.
• The majority of people making forex trades – 3.2 million in total – live in Asia, followed by Europe and North America, which claim 1.5 million each.
• The average daily trading volume of these underperformers range from $1 billion to $3 billion.
• By sliding the draggable clock, you can view how each trading session corresponds with the time zone you have selected, as well as the trading volume for that period.

The foreign exchange market is the largest and most liquid market in the world. It offers exchanges between any two nation’s currencies and includes major, minor and exotic currencies. The result is a market that offers hundreds of possible currency pairs to trade. Founded in Australia and regulated by ASIC (Australia), CySEC (Europe), and the FSA (offshore), IC Markets has carved a niche for itself as one of the largest forex brokers by volume. The forex broker operates on an ECN model and offers top trading technology and incredibly low spreads, making it a favourite among forex traders. With a daily turnover of $22.68 billion, it’s no surprise that our IC Markets Review found them to be one of the most popular brokers.

Forex.com

The currency pair EUR/USD represents the two large economies- the USA and the European Union. It accounts for about 20% of the trading volume, resulting in tight spreads. However, there are also risks to be aware of, including higher volatility, more competition, and lower profit margins. By understanding the factors that affect currency pair trading and the risks and benefits of trading the most traded currency pairs, traders can make informed decisions and improve their chances of success in the forex market. In conclusion, the most traded currency pairs are an important part of the forex market.

Explore the most popular forex pairs with CMC Markets

Leading brokers offer comprehensive trading platforms that support a wide range of currency pairs, from the major ones like EUR/USD and USD/JPY to more exotic pairs like USD/CNY. The NZD/USD was the least traded among the seven major pairs, with daily averages of $49 billion for forex swaps (↥0.8% from 2019), $29.4 billion for spot transactions (↧23.3%), and $12.3 billion for outright forwards (↧5.1%). Options and currency swaps in the 14th most liquid pair accounted for a meager 8.6% of the NZD/USD daily turnover, with a combined volume of $8.5 billion.

Which Countries Have the Most Forex Turnover?

According to Reuters, Lebanon’s currency has lost approximately 98% of its value since the country experienced a crippling financial crisis in 2019. Iran is a prime example, ranking as the country with the second weakest currency on a global scale. The depreciation of the Iranian rial is so monstrous that the currency virtually has no value. A single US dollar is equal to 42,100 Iranian rials and historical data suggest this has been the case for at least five years back. The share of the USD/GBP decreased negligibly by 0.1 pp, while that of the USD/CNY rose from 4.1% to 6.6% during this three-year period.

The central banks, institutions, and hedge funds take up a large trading volume. With us, you can trade the USD/CNH currency pair – CNH being the offshore version of the yuan that is traded outside of mainland China. Yuan is referred to as CNY only when it’s traded in the onshore Chinese market.