The G10 currency pairs, also known as the Group of Ten currency pairs, refer to a group of major currencies that are most frequently traded in the foreign exchange (forex) market. These currencies belong to countries that are considered to be economically and politically stable, and they play a significant role in global trade and finance. The G10 currencies include the following:
- US dollar (USD)
- Euro (EUR)
- Japanese yen (JPY)
- British pound (GBP)
- Swiss franc (CHF)
- Canadian dollar (CAD)
- Australian dollar (AUD)
- New Zealand dollar (NZD)
- Swedish krona (SEK)
- Norwegian krone (NOK)
The volatility of forex markets can provide traders with a range of benefits, including the potential for increased profit, but also comes with increased risk, which makes it important to learn what moves forex markets. Knowing what has caused price fluctuations in the past can help traders forecast the future price movements of their chosen currency pair. Below is a summary overview of each G10 currency pair:
EUR/USD (Euro/US Dollar) – Major
- Represents the exchange rate between the euro and the US dollar.
- Considered one of the most liquid and heavily traded currency pairs.
- Affected by economic indicators and monetary policy decisions of the European Central Bank (ECB) and the US Federal Reserve (Fed).
GBP/USD (British Pound/US Dollar) – Major
- Represents the exchange rate between the British pound and the US dollar.
- Influenced by economic indicators, such as GDP, inflation, and employment, in the UK and the US.
- Affected by political events, particularly related to Brexit negotiations and UK economic policies.
USD/CAD (US Dollar/Canadian Dollar) – Major
- Represents the exchange rate between the US dollar and the Canadian dollar.
- Influenced by economic indicators, such as GDP, inflation, and oil prices, as Canada is a major oil exporter.
- Sensitive to interest rate differentials between the Bank of Canada and the US Federal Reserve.
USD/CHF (US Dollar/Swiss Franc) – Major
- Represents the exchange rate between the US dollar and the Swiss franc.
- Influenced by the monetary policy decisions of the Swiss National Bank (SNB) and the US Federal Reserve.
- Considered a safe-haven currency pair, with the Swiss franc often appreciating during times of global uncertainty.
USD/JPY (US Dollar/Japanese Yen) – Major
- Represents the exchange rate between the US dollar and the Japanese yen.
- Highly influenced by monetary policy decisions of the Bank of Japan (BoJ) and the US Federal Reserve.
- Sensitive to economic data from both countries, particularly related to GDP, employment, and inflation.
AUD/USD (Australian Dollar/US Dollar) – Major
- Represents the exchange rate between the Australian dollar and the US dollar.
- Affected by economic indicators, such as GDP, employment, and commodity prices, especially for commodities like gold and iron ore.
- Sensitive to interest rate differentials between the Reserve Bank of Australia (RBA) and the US Federal Reserve.
NZD/USD (New Zealand Dollar/US Dollar) – Major
- Represents the exchange rate between the New Zealand dollar and the US dollar.
- Influenced by economic indicators, such as GDP, inflation, and dairy prices, as New Zealand is a major dairy exporter.
- Sensitive to interest rate differentials between the Reserve Bank of New Zealand (RBNZ) and the US Federal Reserve.
EUR/GBP (Euro/British Pound) – Minor / Gross Pair
- Represents the exchange rate between the euro and the British pound.
- Influenced by economic indicators and monetary policies of the European Central Bank and the Bank of England.
- Affected by political events, particularly related to Brexit negotiations and Eurozone economic policies.
EUR/JPY (Euro/Japanese Yen) – Minor / Cross pair
- Represents the exchange rate between the euro and the Japanese yen.
- Influenced by economic indicators and monetary policy decisions of the European Central Bank (ECB) and the Bank of Japan (BoJ).
- Sensitive to risk sentiment in the global markets, as the Japanese yen is considered a safe-haven currency.
USD/SEK (US Dollar/Swedish Krona) – Exotic
- Represents the exchange rate between the US dollar and the Swedish krona.
- Influenced by economic indicators, such as GDP, inflation, and interest rates in both countries.
- Sensitive to commodity prices, particularly for commodities like oil, as Sweden is a major oil importer.
USD/NOK (US Dollar/Norwegian Krone) – Exotic
- Represents the exchange rate between the US dollar and the Norwegian krone.
- Influenced by economic indicators, such as GDP, inflation, and oil prices, as Norway is a major oil exporter.
- Sensitive to interest rate differentials between the Norges Bank and the US Federal Reserve.
These G10 currency pairs are actively traded in the forex market and serve as important benchmarks for global currency movements. Traders and investors analyze various factors to make informed decisions regarding these pairs, including economic data, central bank policies, geopolitical events, and global market sentiment.
It’s important to note that while these currency pairs are considered major and highly liquid, there are numerous other currency pairs available for trading in the forex market. These include cross currency pairs (pairs without the USD) and exotic currency pairs (pairs involving currencies from emerging markets).
Trading G10 currency pairs provides opportunities for speculation, hedging, and portfolio diversification. However, as with any trading activity, it’s essential to conduct thorough research, stay informed about global economic developments, and manage risk effectively.
