Based on the transaction volume of global currencies, that is, the currencies that are frequently traded and common in the foreign exchange market are called "major currencies". According to the statistics of the Bank for International Settlements (BIS) in 2019, the currency transaction volume is from high to low, in order of US dollar, euro, yen, pound, Australian dollar, Canadian dollar, Swiss franc, RMB... The New Zealand dollar, one of the traditional major currencies, has been replaced by the RMB and even the Hong Kong dollar in recent years, ranking tenth. However, whether it is the eight or ten major currencies, they have occupied the vast majority of the transaction volume in the global foreign exchange market.
Other currencies are also collectively referred to as non-mainstream currencies and emerging currencies. However, they will also appear in certain economic environments and market themes. For example, the BRICS countries were often mentioned in the early years. At that time, the Brazilian real, Russian ruble, Indian rupee and South African rand also attracted attention.
After World War II, the gold standard system used by various countries collapsed, and the "Bretton Woods system" established the dollar standard. At that time, the United States was strong, and the currencies of various countries were pegged to the dollar at a fixed exchange rate, ending the turbulent international financial market after the war. Since then, international trade settlement and payment currencies have mostly been dominated by the US dollar. The US dollar is the world's largest reserve currency. Therefore, currency pairs with the US dollar are called major currency pairs, such as: the European and American pairs (EUR/USD), the US-Japan pairs (USD/JPY), which also reflects the economic model centered on the US dollar.
Basically, currency pairs that do not involve the US dollar are called cross-rates. Since the settlement currency has been dominated by the US dollar to a great extent, currencies of various countries may not be directly exchangeable. The operation is to convert currency A into US dollars first, and then convert US dollars into currency B. Therefore, the exchange rate between each currency and the US dollar can be converted into a cross rate by mathematical methods. In the foreign exchange market, cross-rate transactions related to the euro, the Japanese yen, and the British pound are the most active. From the perspective of investors, the role of cross-rates is that there is no need to establish two positions.
Assume that AUD/USD is 0.7 and USD/JPY is 110, so the exchange rate of AUD/JPY is 0.7*110=77.
For example, an investor who is bearish on the Japanese yen and bullish on the Australian dollar only needs to go long on AUD/JPY directly, without having to go long on AUD/USD and USD/JPY at the same time.
All financial products traded on margin carry a high degree of risk to your capital. They are not suited to all investors and you can lose more than your initial deposit. Please ensure that you fully understand the risks involved, and seek independent advice if necessary.