Understanding Forex Quotes
- The primary forex listed is the bottom forex
- The worth of the bottom forex is all the time 1
The Bid and the Ask
Identical to different markets, foreign exchange quotes encompass two sides, the bid and the ask:
When USD is the bottom forex and the quote goes up, which means USD has strengthened in worth and the opposite forex has weakened.
The three exceptions to this rule are main forex pairs that aren’t based mostly on the US greenback they embody; the British pound (GBP), the Australian greenback (AUD) and the Euro (EUR).
For these pairs, the place USD isn’t the bottom forex, a rising quote means the US greenback is weakening and buys much less of the opposite forex than earlier than.
In different phrases, if a forex quote goes increased, the bottom forex is getting stronger. A decrease quote means the bottom forex is weakening.
Forex pairs that do not contain USD in any respect are referred to as cross currencies, however the premise is similar.