Market guide

FX education guide

Foreign exchange markets quote one currency against another. FX education should explain pairs, exchange-rate measurement and the macro factors that can influence currencies.

What FX is

An FX pair shows the price of one currency in terms of another. In AUD/USD, the Australian dollar is the base currency and the US dollar is the quote currency. Exchange rates can move with interest-rate expectations, inflation, economic growth, commodity prices, trade flows, central-bank policy and changes in risk sentiment.

Key terms

Base currency

The first currency in a pair.

Quote currency

The second currency in a pair, used to price the base currency.

Cross rate

An exchange rate between two currencies that may not involve the US dollar.

Interest-rate differential

The difference between policy-rate or yield expectations across two economies.

What to learn next

How central-bank decisions and inflation data affect currencies.
Why commodity prices can matter for commodity-linked currencies.
How risk sentiment can move safe-haven and growth-sensitive currencies.
How FX differs from currency futures and CFDs.

Useful references

RBA: Exchange rates Propex24 FX overview Trading glossary

Related guides

CFDs Commodities Futures Glossary

General education only

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