Beginners use this pair, riding its steady flow for consistent returns over months. For those new to investing, it’s about how often banks, traders, and businesses use them, ensuring you can buy or sell fast without big price gaps, a sign of their reliability. This core trait helps beginners see why these pairs dominate, offering a solid base to grow money with less risk of wild swings over time. The value of the Hong Kong dollar is pegged to the US dollar in a unique system known as a linked exchanged rate. The Hong Kong dollar is allowed to fluctuate within a band of HK$7.75 to HK$7.85 to US$1, and traders can take advantage of any price movements within this band. The narrow band means that the pair showed unnatural stability throughout 2020 and early 2021 – a period during which the pandemic caused extreme volatility in many other currencies.
- 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 main export is crude oil, so the Canadian dollar is therefore influenced by the price of crude.
- The high daily volume of EUR/USD transactions ensures that the pair has a lot of liquidity, which generally results in tight spreads.
- Turning our gaze to specific currency pairs, we see that crosses like EUR/CZK, JPY/CHF, JPY/ZAR, JPY/NZD, and EUR/HUF were the five least traded pairs based on average daily turnover.
The broker operates on both a dealing desk and STP model, offering a range of platforms and tight spreads. Our Forex.com Review rated the broker highly for their no-commission trading account. The most often traded currency pairs are the EUR/USD (approx. 28% of all volume), the USD/JPY (approx. 13%), the GBP/USD (approx. 11%), the AUD/USD (approx. 6%), and the USD/CAD (approx. 5%). The GBP is the most traded currency against the USD and EUR, and the fourth internationally, representing 17% of trading. 34% of forex transactions pass through London’s “City”, which is the currency market’s main financial centre.
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- The majority of the forex trading statistics referenced in this article are sourced from the Bank of International Settlements (BIS) Triennial Central Bank Survey 2022.
- The ruble, ringgit, and Colombian peso share the same average turnover of $14 billion per day, according to the BIS survey.
- 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 daily turnover of EUR/GBP increased from $109 billion in 2010 to $154 billion in 2022.
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Singapore, Hong Kong, and Japan ranked third, fourth, and fifth with $929 billion, $694 billion, and $433 billion, respectively. Check the graphic below for the full list of countries that made it to the top 10. The euro placed second with $2.29 trillion in daily turnover on average, followed by the yen with $1.25 trillion and the sterling with $968 billion. The daily turnover of forex transactions involving the CNY increased by nearly 85%, jumping from $285 billion in 2019 to $526 billion in 2022. While the sterling and the yen remained practically unchanged from the previous survey period, the CNY registered the most dramatic growth in terms of market share. The renminbi witnessed a 2.7 pp increase from April 2019 when it was on most traded currency pairs 2020 one side of 4.3% of all forex trades.
This offers a broader range of options for traders but also calls for more nuanced strategies. Of these, seven major pairs make up 85% of global foreign exchange transactions. Switzerland is a small country located in the European Alps, yet its strong international trade and its inflows of money make the Swiss franc one of the major currencies traded on the forex market. Japan’s proximity and tensions with China can have a significant impact on the yen.
Least Traded Forex Pairs by Average Daily Turnover (in bn USD)
Survey data indicates less traded pairs like USD/KRW and USD/MXN experienced a period of stagnation as their daily turnover only rose by 1.6% and 1%. Traders need to be cautious about interest rates and other factors after Brexit in 2020. The most recent BIS survey found that the Chinese renminbi saw the biggest increase in market share since the 2019 survey, with USD/CNY pairings representing 6.6% of all trades in 2022. This meant that it became the fifth most traded currency, up from eighth place three years ago. GBP/USD is colloquially called ‘cable’ on account of the deep-sea cables that used to deliver the bid and ask quotes between London and New York.
Global Forex Trading Statistics
The United States secured the second spot with $435 billion in average daily turnover for this pair, followed by France with $110 billion, Singapore with $109 billion, and Switzerland with $101 billion. When traded against all other currencies, the USD once again outpaced all other top performers as it exhibited daily averages of $994 billion for outright forwards, $116 billion for currency swaps, and $265 billion for options. The euro and the yen recorded the second highest trading volumes across these instruments, boasting a combined daily turnover of $414 billion and $257 billion, respectively.
Why They Lead Forex
The JPY is greatly considered by traders to be a safe currency in periods when risk aversion hits the markets, but the currency is also used by carry traders when the appetite for risk appears. Low interest rates in Japan allow these traders to borrow money at a low cost in order to invest in other countries. The US dollar is the most traded currency in the forex market, it represents about 86% of all foreign exchange market transactions. It is also used as a measurement tool to evaluate other currencies and commodities. This pair represents the exchange rate between the Euro and the Japanese yen.
This impressive figure represents around 42.9% of the overall turnover of spot transactions involving the US dollar. For clarification, spot trading involves buying or selling currencies with immediate settlement and physical delivery in most cases. Non-financial market participants like retail traders, for instance, generated around $115 billion of the total average swap turnover per day. The euro ranked second with $1.26 trillion and a 16.6% share of the overall amount. The pound sterling placed third with $560 billion, followed by the yen and the Canadian dollar with $557 billion and $252 billion, respectively. With this instrument, traders are left with a long position in one currency in a pair and a short position in the second currency.
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Since the 1990s, we have seen massive growth in the economy on a global scale. The adoption of technological advancements in the financial sector brought many positive changes. Similarly, a consensus among prominent international players was necessary to promote global economic cooperation.
The US dollar reigns supreme over the OTC forex market as is to be expected from the world’s primary reserve currency. The USD outpaced all other currencies in terms of average daily turnover with a whopping $6.6 trillion ($6,639 billion) in April 2022. This number represents approximately a 14% increase from the same period three years earlier when the average amount of USD traded daily stood at the still-impressive $5.81 trillion. USD/JPY is the second most traded currency pair, accounting for about 13% of daily trading volume in 2019. The interest rates set by the US Federal Reserve and Bank of Japan influence the exchange rates.
Allocated Foreign Exchange Reserves by Currency Q3/Q4 2024 (in bn USD)
In terms of the best day to trade forex, Thursday and Friday are the most volatile weekdays. The Australian session is the smallest of the key trading trading sessions, but still a significant session in the Pacific region. Picture a rollercoaster ride where the car climbs slowly before plunging into a sharp drop—that’s what market volatility feels like. This information is provided for informative purposes only and should not be construed to be investment advice.
Top 20 Forex Currencies by Amount Traded
Diving deeper into IMF data, we see that foreign exchange reserves in the US dollar decreased from around $6.79 trillion in Q3 of 2024 to $6.63 trillion in Q4 of the same year. Nevertheless, the dollar’s share of allocated reserves grew by half a percentage point to 57.80% in the fourth quarter of 2024, up from 57.30%, primarily because other reserve currencies depreciated against it. Despite remaining the world’s dominant foreign exchange currency, the greenback has been experiencing a gradual downturn as its share in global forex reserves declined by more than 7 percentage points between 2004 and 2024. This marks a 9.6% increase from the previous survey period when forex swaps for EUR/USD stood at $913.8 billion. Increases from 2019 occurred in all other instruments involving the EUR/USD pair, including spot transactions (↥0.6%), outright forwards (↥9.5%), currency swaps (↥52.1%), and options (↥5.7%). This impressive performance makes sense, considering the euro and the dollar represent the two most buoyant economies in the world.
The “Kiwi” pair is appreciated for New Zealand’s robust economy and the influence of agricultural and commodity exports on the New Zealand dollar’s value. The USD/CHF, or “Swissie,” is valued for Switzerland’s political neutrality and financial stability, making the Swiss franc a “safe-haven” currency during market turmoil. IG is a trading name of IG Markets Limited and IG Markets South Africa Limited.