What are Major Currencies?

Major Currencies or the "majors" are usually deemed to be made up of six different currency pairs from seven counterparts as detailed below - you will notice they all include a currency relative to the value of the US Dollar.

  • Euro vs. US Dollar (EUR/USD)
  • US Dollar vs. Japanese Yen (USD/JPY)
  • British pound vs. US Dollar (GBP/USD)
  • Australian Dollar vs. US Dollar (AUD/USD)
  • US Dollar vs. Canadian Dollar (USD/CAD)
  • US Dollar vs. Swiss Franc (USD/CHF)

These currencies are seen to be the most actively traded in the foreign exchange markets; therefore often the most cost effective to trade given the spread between the buy and sell price narrower than that of their less trade counterparts. You will also notice each currency is defined by a three letter abbreviation known as ISO Code (International Organization for Standardization).

What are Minor Currencies?

Minor Currencies or the 'minors' generally consist of all other currency pairs and cross currencies. For example, we could classify the Euro against the Aussie dollar (EUR/AUD) as a minor currency or the New Zealand against the US Dollar (NZD/USD) can also be classified as a minor currency.

Under the band of minor currencies you will also hear the term exotic currencies which may consist of irregular crosses such as the US Dollar against Turkish lira (TRY) or the Polish zloty (PLN). Often exotic currencies can demand a higher cost to trade, given the illiquid market conditions - quite simply, the less participants that trade the currency, the greater the spread, therefore the cost. Below is an example of some of the minor currencies or 'cross currencies.'

  • Euro vs. Australian Dollar (EUR/AUD)
  • British pound vs. Japanese Yen (GBP/JPY)
  • Euro vs. Swiss Franc (EUR/CHF)
  • US dollar vs. New Zealand Dollar (USD/NZD)
  • Australian Dollar vs. Japanese Yen (AUD/JPY)
  • British Pound vs. Swiss Franc (GBP/CHF)

If you want to know more about Foreign Exchange, you can sign up here for a free copy of Introduction to Foreign Exchange from GO Markets from which this article has been taken.