Category: Cross Rate

Types of Crosses

Currency Crosses The U.S. dollar (USD) is the most actively traded currency in the multi-trillion-dollar daily foreign exchange market. In the past, investors or hedgers who wanted to trade a pair such as the euro vs. the yen, known as EUR/JPY, needed to do it through the dollar. This meant...
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Understanding a Cross Finance

If a stockbroker receives separate orders to buy and sell at the same price at the same time, they must offer the stock in the market at a higher price than the bid. If no higher bid is available, they can execute the two deals at the same time and...
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Bid-Offer Spread and Cross Rates

The major crosses have bid-offer spreads slightly wider than the major dollar-based pairs, but they are quoted actively in the interbank market. Spreads in the minor crosses are generally much wider. Some are not quoted directly at all, so a quote must be constructed from the bids and offers in the component...
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Examples of Minor Cross Rates

Cross rates that are traded in the interbank market but are far less active include the Swiss franc versus the Japanese yen, or CHF/JPY, and the British pound versus the Swiss franc, or GBP/CHF. Cross rates involving the Japanese yen are usually quoted as the number of yen versus...
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Examples of Major Cross Rates

Any two currencies can be quoted against each other, but the most actively traded cross currency pairs are the euro versus the British pound, or EUR/GBP, and the euro versus the Japanese yen, or EUR/JPY. In fact, these two pairs are the only cross-rate currency pairs that appear in...
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The Major Currency Pair

Foreign exchange (forex) traders use the term cross rate to refer to price quotes between any pair of currency in which neither is the U.S. dollar. Most transactions on the forex are in major currency pairs. That is, one of the currencies being swapped is the U.S. dollar. For...
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Understanding the Cross Rate

In the transaction described above, the U.S. dollar is used to establish the value of each of the two currencies being traded. For example, if you were calculating the cross rate of the British pound versus the euro, you would first determine that the British pound, as of June...
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What Is a Cross Rate?

A cross rate is a foreign currency exchange transaction between two currencies that are both valued against a third currency. In the foreign currency exchange markets, the U.S. dollar is the currency that is usually used to establish the values of the pair being exchanged. As the base currency, the U.S....
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