Oz Forex Spot Rates - Quoting Spot Exchange Rates

Nov. 26, 2010 - PRLog -- Oz Forex Spot Rates

Spot exchange rates can be quoted in two ways: as a "direct" quotation or as an "indirect" quotation. A direct quote is one in which the amount of the domestic currency (i.e., dollars and cents if you are in the United States) is given per unit of the foreign currency. An indirect quotation is quoted in the amount of the foreign currency per unit of domestic currency. For example, in the United States, a direct quote for the euro would be 1.25 USD = 1 EUR. An indirect quote would be 0.80 EUR = 1 USD.

You may also hear the phrase "American terms." The phrase is used in the United States and refers to a direct quotation for U.S. dollars per one unit of the foreign currency. In Europe, you might hear the phrase "European terms," referring to a direct quotation for someone in Europe from their currency per one unit of U.S. dollar. If you're in the United States and hear the phrase "European terms," that means you are being given the quote from the perspective of the foreign currency per one U.S. dollar. Get Internet #1 - Oz Forex Spot Rates @ http://forexcure01.webs.com and be Successful forever!

In 1978, in an attempt to integrate the foreign exchange market into a single global market, the U.S. market changed its practices to conform to the European market. So today most quotes are given in European terms, as the foreign currency per one U.S. dollar.

Another set of terms you will likely hear when talking about foreign currency trading on the spot market is "base" and "terms" currency. The base currency is the underlying or fixed currency. For example, in European terms, the U.S. dollar is the base currency because it is the currency in the transaction that is fixed to one unit. The terms currency in the transaction is the foreign currency being quoted as a pair to the U.S. dollar. When you hear a quote, the base currency is stated first.

When a market maker quotes a currency for a trade in the spot market, he quotes it at the price at which he will buy or sell the currency per one unit of the base currency. For example, suppose you request a quote on a USD/CHF spot transaction. (USD is the ISO code for the United States dollar, and CHF is the ISO code for the Swiss franc.) The spot transaction may also be called the "dollar-swissie." The market maker could respond with a quote of 1.0275/85, which means that the market maker is willing to buy CHF at a price of 1.0275 per one U.S. dollar and sell CHF at a price of 1.0285 per one U.S. dollar. Get Internet #1 - Oz Forex Spot Rates @ http://forexcure01.webs.com and be Successful forever!

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