Forex Trading Currency Pairs 2 — Questions and Answers
Question 1: In the currency pair USD/JPY, which currency is the quote currency?
- USD
- JPY (Correct answer)
- Both equally
- Neither
Correct answer: JPY
The quote currency (counter currency) is the second currency in a pair, which is JPY in USD/JPY.
Question 2: Which of the following is considered an exotic currency pair?
- EUR/USD
- USD/JPY
- USD/TRY (Correct answer)
- GBP/CHF
Correct answer: USD/TRY
USD/TRY (US Dollar/Turkish Lira) is an exotic pair because it involves an emerging market currency.
Question 3: What does a rising EUR/USD rate indicate?
- EUR is weakening against USD
- USD is strengthening against EUR
- EUR is strengthening against USD (Correct answer)
- Both currencies are rising
Correct answer: EUR is strengthening against USD
A rising EUR/USD rate means more USD is needed to buy one EUR, indicating EUR appreciation relative to USD.
Question 4: Which currency pair is known as 'Cable'?
- EUR/USD
- GBP/USD (Correct answer)
- USD/CAD
- AUD/USD
Correct answer: GBP/USD
GBP/USD is nicknamed 'Cable' due to the transatlantic telegraph cable used to transmit exchange rates in the 19th century.
Question 5: If USD/CHF is quoted at 0.9200, how many Swiss Francs do you receive for 1 US Dollar?
- 1.0870
- 0.9200 (Correct answer)
- 9.2000
- 0.0920
Correct answer: 0.9200
USD/CHF at 0.9200 means 1 USD buys 0.9200 CHF.
Question 6: Which of these pairs is classified as a commodity currency pair?
- EUR/GBP
- USD/JPY
- AUD/USD (Correct answer)
- EUR/CHF
Correct answer: AUD/USD
AUD/USD is a commodity pair because Australia's economy is heavily tied to commodity exports, making AUD sensitive to commodity prices.
Question 7: What is the cross rate?
- The exchange rate between two major currencies
- An exchange rate between two currencies that does not involve USD (Correct answer)
- The spread between bid and ask price
- The daily average rate published by central banks
Correct answer: An exchange rate between two currencies that does not involve USD
A cross rate is an exchange rate between two currencies where neither is the US Dollar, such as EUR/GBP.
Forex Trading Currency Pairs 2
In the currency pair USD/JPY, which currency is the quote currency?