Top 10 Most-Traded Currencies

[Jason Rogers]

I saw the graph below in an article in the Wall Street Journal today. It shows the top 10 most-traded currencies in the world, and their historical rankings. The data were compiled from an annual survey conducted by the Bank for International Settlements (BIS) which also shows that the average trading volume in the forex market is now $5.3 trillion a day. That's an increase of 33% since 2010.

Interesting to see the Yuan and the Peso crack the top 10. I've never placed a live MXN trade, since I try to stick to the majors. I might reconsider that stance now. How about you guys? Which of these 10 currencies do you trade? Do you trade any currencies that aren't in the top 10?

 

[Purple Brain]

I don't trade the Yuan or the Peso, but the other 8 majors I will trade all the crosses in principle though in practice it's principally the crosses with consistently highest volume:

EUR/USD
GBP/USD
USD/JPY
USD/CHF
USD/CAD
EUR/GBP
EUR/JPY
GBP/JPY

I also do more with AUD and NZD these days purely because the trends are often cleaner.

At the beginning of this year China didn't plan to allow its currency to float until 2018 at the earliest, but they are making genuine moves I understand to open up their financial dealings so that may well come in, which would be a good thing if they are likely to end up over-taking the US as the primary global economy.

Mexico is a rising star, but I am surprised it is ahead of all the BRICS countries (bar China).

Care to share what you can as an FXCM person with what the majority of your clients are trading?

 

[Jason Rogers]

Care to share what you can as an FXCM person with what the majority of your clients are trading?

Crosses involving two major currencies are still the most popular pairs traded by our clients, but interest in MXN and CNH has been growing. The twelve most popular currency pairs among FXCM clients are the following:

• AUD/JPY,
• AUD/USD,
• EUR/CHF
• EUR/GBP
• EUR/JPY
• EUR/USD
• GBP/JPY
• GBP/USD
• NZD/USD
• USD/CAD
• USD/CHF
• USD/JPY

Currently CNH is only available to FXCM UK clients, so we may see a further jump in trading volume when CNH is made available to FXCM US and FXCM Australia clients.

 

[Purple Brain]

Thanks Jason. I see increasing interest in the Scandi currencies in the twittersphere. Are these available to your clients and if so, how do they rate for volume against FXCM's top-12?

 

[Jason Rogers]

Thanks Jason. I see increasing interest in the Scandi currencies in the twittersphere. Are these available to your clients and if so, how do they rate for volume against FXCM's top-12?

FXCM offers trading in the Danish Krone (DKK), the Norwegian Krone (NOK) and Swedish Krona (SEK). While volume in these currencies is not as high as for the majors, they are particularly popular among our clients in these countries.

 

[Jason Rogers]

At the beginning of this year China didn't plan to allow its currency to float until 2018 at the earliest, but they are making genuine moves I understand to open up their financial dealings so that may well come in, which would be a good thing if they are likely to end up over-taking the US as the primary global economy.

Hi PB,

I thought you'd be interested in this news:

"China’s yuan overtook the euro to become the second-most used currency in global trade finance after the dollar this year, according to the Society for Worldwide Interbank Financial Telecommunication..."​

source: Bloomberg

 

[Purple Brain]

Hi PB,

I thought you'd be interested in this news:

"China’s yuan overtook the euro to become the second-most used currency in global trade finance after the dollar this year, according to the Society for Worldwide Interbank Financial Telecommunication..."​

source: Bloomberg

Damn. Got to change all my screens now.

So what are the top 8 majors now Jason?

 

[NVP]

interesting thread - thanks J

N

 

[Purple Brain]

I guess if I wanted to keep a top-8 I'd drop the NZD and start trading the CNY, but still feels like trading the eur/chf - not a level playing field.

Anyone trading CNY and have comments on trendiness, spikes, floors/ceilings etc?

 

[Jason Rogers]

Damn. Got to change all my screens now.

So what are the top 8 majors now Jason?

Hi PB,

The top most-traded currencies have not changed.

The rankings mentioned in that Bloomberg article refer to financing, not trading. For example, suppose I borrowed £100 from you to start my lemonade stand business. We could draw up a contract of the amount I borrowed and how I was to pay you back. In this case, the financing would be done in British Pounds. If I borrowed $150 instead and had to pay you back in dollars, then we would say the financing was done in Dollars.

Referring back to the article: "China, Hong Kong, Singapore, Germany and Australia were the top users of yuan in trade finance... overseas exporters are using the renminbi more as the contract currency to increase the attractiveness and competitiveness of goods or services sold to China"

 

[Purple Brain]

I appreciate something like 85% of Spot FX trading is speculative in nature, but I also thought deals on FX Futures would be hedged in the spot market or at least in some way be linked to it or have an impact upon it. When a German exporter/importer designates a deal in Yuan, they still have to convert the yuan received / yuan required to/from Euros - don't they?

If I went to my bank and asked them to transfer £100 to your US account for your lemonade start-up, wouldn't they physically have to sell my £100 and buy $150 to do the transfer?

As I think about it I realise I have no idea how physical delivery of currencies are carried out apart from Exchange Desks at airports.

The lemonade business - I night be interested. Anything has to be better than trading bloody FX.

 

[Jason Rogers]

When a German exporter/importer designates a deal in Yuan, they still have to convert the yuan received / yuan required to/from Euros - don't they?

If I went to my bank and asked them to transfer £100 to your US account for your lemonade start-up, wouldn't they physically have to sell my £100 and buy $150 to do the transfer?

What's important here is the contract currency. For example, as I look at my Trading Station right now, the GBP/USD rate is 1.6373

You and I could agree to a contract for £100.00 or $163.73. It would be more convenient for me if the contract currency was USD, since I'll be operating my lemonade stand here in the US and my customers will be paying me in US dollars. That way I can pay you back in the same currency that I earn my income, and you are the one who has to worry about the exchange GBP/USD exchange rate changing.

On the other hand, since you live in the UK, you would probably prefer that my debt obligation to you be for £100.00. That way I have to worry about the GBP/USD exchange rate moving against me but you are still assured of getting your £100.00 back. If I'm especially keen to entice you to lend money to my lemonade stand business, then I might agree to a contract in GBP even though it's not what I prefer.

In the same way, going back to the Bloomberg article "overseas exporters are using the renminbi more as the contract currency to increase the attractiveness and competitiveness of goods or services sold to China"

That's also why Uncle Sam has such a great gig. The US government gets to borrow money in their own currency, and if the USD plummets in value it's the lender that suffers.