So you know how to trade. You know how to use Indicators. You understand fundamental analysis as well as technical analysis, and still, you’re not sure which currency pairs to trade. You’re not alone. Today’s volatility might seem attractive for experienced daytraders, but if you’re in your first year of trading, you might be getting a little overwhelmed.
A good place to start looking for a more stable currency pair is with the most popular trading currencies. Alternatively, a cautious trader might only invest in currencies that are backed by a strong economy. Here are the top eight currencies based on GDP and other economic indicators.
The United States of America has been struggling with domestic issues for the last few years, but still, it remains the world’s largest economy with a GDP forecast of over $21 trillion. The US economy accounts for over 20% of the world's output. Coincidently, around 20% of the Fortune 500 companies are US based. With 25+ trading pairs available, there’s no shortage of choices when trading the world’s number one currency.
China’s economy made an incredible expansion over the last ten years. China, as a major manufacturing hub, offers unbeatable prices. Even more unbelievably, authorities are actually throttling down China’s growth to avoid creating an economic bubble. Often traded against USD, this Chinese powerhouse is definitely a currency to keep an eye on.
The world views Japan’s economy as stable, and with a GDP forecast of 5.2 trillion USD, it’s also massive. Decades ago, the Japanese economy experienced a very similar expansion to China, but the government quickly created budget deficits that financed public projects. Deficits that eventually transformed the emerging nation into the manufacturing machine it is today. With a trend for economic growth producing positive forecasts for 2019, the 15+ JPY currency pairs will surely see some action in Q2.
Given that the euro is a shared currency, it could easily be placed at the very top of the list. Since the eurozone has its own separate GDP reports, it gets moved to the number 4 spot. The big euro movers are Germany, France, and Italy, and euro traders are seeing stormy times as each of the nations go through the GDP highs and lows. Germany has had consistent economic growth for decades and bounced back better than most after the last Recession.
Meanwhile, France has the 7th largest economy in the world, carrying 20% of the eurozone’s GDP. A global leader in automotive, aerospace, processed foods, pharmaceuticals, and cosmetics, France brings a lot to the EU table.
Italy stands as the 8th largest economy, despite experiencing some internal political instability. Italy was already coasting down the river before the last recession and didn’t fare well when the credit got crunched. Still fighting to recover, Italy faces a labor market struggle, continued low productivity, high taxes, and very uncertain banking activities.
United, the 28 countries make a melting pot currency that enjoys a staggering 34+ trading pairs.
It’s been the talk of the town recently, but many traders may well be avoiding GBP while Brexit runs its course. GBP took a hard hit during the 2008 recession after overinvesting in the housing market, and never really got back on its feet. In 2016, when the British government first announced a referendum, GBP rapidly fell in mere days and still struggles today. The British economy sits in 5th place with a $2.62 trillion GDP, but the threat of a ‘no deal’ Brexit may push it down the list for 2020. However, the growing sentiment for ‘second referendum’ could inject life into Sterling. If that happens, GBP trading volumes could rapidly rise and restore the UK economy.
The rupee is the 20th most traded currency, but India is now the 6th highest economy in the world, and it is expected to rise above the UK in the coming twelve months. Prior to the recession, India enjoyed a massive 9% annual growth. A recent report shows that India actually surpassed China for the accolade of ‘fastest growing economy’ with a forecasted 7.4% growth in 2019. Expect big moves leading up to Q3.
The Brazilian Real survived the recession better than most and went on to produce a record-breaking 7.5% growth rate. Political scandals and a credit squeeze slowed growth in recent years, but it still deserves its number 9 spot in the world economy. Despite holding in the top ten economies of the world, BRL is rarely preferred by traders.
Canada stands as the 10th highest economy in the world, beating Russia by a hair. With less than 10% of the United States' GDP, Canada is often underestimated. And yet the Canadians have seen attractive rates that many countries could only dream of. There are 10+ CAD trading pairs available worldwide, and the future of CAD looks positive, although forecasted growth is only 2.0% for the coming year.
What to trade
Gross Domestic Product is not the only indicator used to gauge the stability of a nation’s currency. It definitely can set a solid foundation from which to make your own forecasts and conclusions. As these eight great currencies align with the expected 2019 growth, other currencies that are paired will likely feel a squeeze.
Open an account with Exness and start following the currency prices carefully. With a fully verified account you’ll be able to trade any of the above currencies with the click of a button, and see the results as the top currencies of the world push and pull for market dominance.
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