cross currency

Definitions

Forex

  • A direct trade of two foreign currencies that bypasses the requisite conversion to U.S. dollars in order to expedite the trade.  Trade partners such as England and Japan require cross currency due to the high volume of trade between them.
  • A term used to describe the legal tender of two nations excluding the United States which are exchanged and traded relative to each other in the forex market. Since cross currency pairs often exhibit notable long term trends depending on the relative interest rates in the two non-U.S. Dollar currencies, they can yield profitable trend trading opportunities for forex traders.
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