What is a major currency ?

About parity and gold is about major currencies all trading at par.

What is a major currency ?

A major currency is the paper money unit of a country or group of countries which is highly traded on the foreign exchange markets. There are several such currencies. The four most prevalent ones are the US Dollar (USD), the Eurozone Dollar (EUR), the Japanese Yen (JPY), and the Great Britain Pound (GBP), the Canadian Dollar (CAD), the Australian Dollar (AUD), the Swiss Franc (CHF), and even the NZD or New Zealand Dollar.

When traded against one another they form pairs. For example EURUSD is a code for the Euro trading against the US dollar.

The three letter code is an ISO standard. Any major currency can be traded against another major currency and these trades are carried out under a pair code such as EURUSD is the Euro trading against the US dollar.

The highest volume of trade as of late as been on the EURUSD. These trades are carried out on an interbank network in the foreign exchange market or forex.

The Yuan is the Chinese currency but unlike the list above this countries money is closely pegged to the USD. It does not float freely on the open markets and is not reliably tradeable to retail fx traders.

Along with the major currencies there are hundreds of minor currencies which form pairs but they are not highly liquid and can move dramatically in hours and then not at all for days or weeks.

The Australian dollar, the Canadian dollar, and the New Zealand dollar, are considered to be commodity pairs and usually can be closely correlated to the movement of metal prices or oil contracts.

The USD has been the reserve currency of the world since it took over this role from the Great Britain Pound in the first part of the 1900's. In 2008 when the US banks went bust it seemed that the EUR was going to become the next reserve currency.

A mere two years later in 2010 the Euro is being devalued and looking to go par with the USD.

There you have it for "what is a major currency?".