A cross currency pair, refers to a currency pair that doesn’t involve the US dollar (USD).
Here’s a breakdown:
- Major currencies: These are the most commonly traded currencies, including EUR (Euro), GBP (British Pound), JPY (Japanese Yen), AUD (Australian Dollar), CAD (Canadian Dollar), CHF (Swiss Franc), and NZD (New Zealand Dollar).
- Cross pair: Any pair combining these major currencies excluding USD. Examples include EUR/JPY, EUR/CHF, GBP/JPY, AUD/NZD, and CAD/CHF.
Traders use cross pairs to:
- (Speculate) – (เก็งกำไร) on the relative value of two currencies: Instead of looking at how a currency performs against the USD, they can directly analyze the relationship between two other economies.
- Potentially benefit from (interest rate) – (อัตราดอกเบี้ย) differentials: Carry trade (strategies) – (กลยุทธ์) often involve cross pairs where one currency has a higher interest rate than the other.
Here’s a list of the most traded currency cross pairs (those not involving the US dollar) with high liquidity in the forex market:
- EUR/JPY (Euro/Japanese Yen): This pair represents the Eurozone and Japan, two major economies. Its high liquidity makes it popular for traders.
- EUR/GBP (Euro/British Pound): This pair reflects the economic relationship between the Eurozone and the United Kingdom. It’s another liquid and commonly traded cross pair.
- EUR/AUD (Euro/Australian Dollar): This cross pair is influenced by the European and Australian economies, as well as global commodity prices (Australia is a major commodity exporter).
- EUR/CAD (Euro/Canadian Dollar): This pair is affected by the Eurozone and Canadian economies, with Canada’s oil exports playing a role in its value.
- GBP/JPY (British Pound/Japanese Yen): This cross pair reflects the economic ties between the UK and Japan. It offers good liquidity for traders.
While these are some of the most popular cross pairs, keep in mind that liquidity can vary depending on market conditions.
Here are some additional things to know about cross pairs:
- Liquidity: While major currency pairs involving (USD tend to be more liquid) – (USDมีแนวโน้มที่จะมีสภาพคล่องมากกว่า)(easier to buy and sell), some popular cross pairs like EUR/JPY also have good (liquidity) – (สภาพคล่อง)
- Calculation: The exchange rate for a cross pair is derived indirectly from the USD-based pairs of the two currencies involved.