FX Pairs

Last modified 09:26, 15 Oct 2012

FX Pairs work page

Click on the FX Pairs tool bar button to display a work page containing a table of current foreign exchange cross rate quotes:

The FX Pairs work page provides a convenient method of viewing most of the major Foreign Exchange pairs that are commonly traded.

The work page table is arranged horizontally in rows of country-based quote groups:


Quote Groups

Each country (or currency area in the Euro's case) has a horizontal row in the table containing its quote group. In each quote group there are six common exchange pairs in the following order: US Dollar, Japanese Yen, Australian Dollar, British Pound and Swiss Franc.

Where a currency is listed in its own quote group, it is paired with the Euro.

Quote Pairs

Each Foreign Exchange quote is expressed as a percentage of one of the two currencies.

For each currency pair a convention exists governing which currency the Exchange rate will be quoted in.

In foreign exchange markets, the base currency is the first currency in a currency pair. The second currency is named the quote currency, or, less commonly, counter currency or terms currency.

Exchange Rate quotations are expressed as the price value of the quoted currency per unit (1) of the base currency.

In the example above, one Euro is equal to $1.4692 US Dollars, and one US Dollar is equal to 109.15 Japanese Yen.

Note - This FX market convention is the reverse of mathematical convention.

For example, currently the Euro is the dominant base currency against all other global currencies. As a result all currency pairs traded against the Euro are quoted per EUR 1. For example  the USD - EUR exchange rate is quoted as XUS dollars per 1 Euro.

By convention everything in FX is seen from the perspective of the base currency. Market convention dictates that it is always the base currency which is said to strengthen or weaken (appreciate or depreciate).

For example, even though the relationship is relative and it could equally be said that the Yen has weakened or strengthened against the Dollar, by convention the Dollar is always said to appreciate/depreciate against the Yen.

The market follows an established hierarchy when it comes to selecting the base currency for any major currency pair.

The currency hierarchy for the majors is as follows:

  • Euro
  • Pound Sterling
  • Australian Dollar
  • New Zealand Dollar
  • United States Dollar
  • Canadian Dollar
  • Swiss Franc
  • Japanese Yen

Note - There is no international organization that decides what market convention should be used for any aspect of foreign exchange trading. This list and explanation is merely and explanation of current market  practices.

Historically the British Pound was always the base currency because one unit of GBP was almost always is worth more than one unit of any other major currency. Likewise, the same rule applied to some other currencies with historically close connections with Pound, most notably the Australian and New Zealand Dollars, which are commonly quoted as base currencies. For example the AUD/USD rate is usually shown as one Australian Dollar being equal to a number of US Dollar cents, for example US$0.82.

With the advent of the Euro in 1998, the European Central Bank stipulated that Euro should always be the base currency, even against the Pound. At first the currency markets resisted this, and data providers such as Reuters supplied tandem quotes, but now the Euro as base currency convention is followed.

Other currencies (the minors) are generally quoted against one of the major currencies, however the convention followed for their cross rates between each other is less well defined. However, the general rule for minor currencies is that the less valuable currency is typically the quoted currency, therefore usually resulting in an exchange rate higher than 1.

Data Update

To refresh the current exchange rates, click the DoD Refresh button. butn_go-off.gif The most recent exchange rates will be retrieved and displayed.

If you have a real-time data service with a third-party data provider, click the Streaming Data button butn_stream-off.gif.

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