Minors in forex
Family I · Instruments
Not to be confused with minors in forex.
Minors in forex are currency pairs that do not include the US dollar on either side. They are formed from other major currencies, most commonly the euro, Japanese yen, British pound, Swiss franc, Australian dollar, New Zealand dollar and Canadian dollar. Because they omit the dollar, their liquidity and spreads vary by pair and by session.
Composition and examples
Minor pairs are built from two non-dollar major currencies. Common examples include EUR/GBP, EUR/JPY, EUR/CHF, GBP/JPY, GBP/CHF, AUD/JPY and NZD/JPY. The exact list is not fixed; some sources treat any non-dollar pair of liquid currencies as a minor, while others reserve the term for pairs among the most heavily traded currencies.
Because both legs are major currencies, minor pairs generally have narrower spreads than exotic pairs, but wider spreads than the most liquid major pairs. Liquidity is typically highest when the trading sessions of both currencies overlap.
Worked example: pip value in a minor pair
Pip value depends on the quote currency and the account currency. For a standard lot (100,000 units) of EUR/GBP, one pip is 0.0001 GBP. If the account is in USD, the pip value in USD depends on the GBP/USD rate at the time.
The same calculation with a different GBP/USD rate changes the USD pip value. Brokers may also quote pip values directly in the account currency.
Trading characteristics
Minor pairs often show stronger trends and wider daily ranges than major pairs, particularly those involving the Japanese yen or the British pound. Spreads, margin requirements and available leverage for minor pairs vary by broker and by regulator, and are typically less favourable than for major pairs. Some brokers classify certain minor pairs as exotic for margin purposes.
Economic releases from either currency's region can move a minor pair, and because the US dollar is absent, US-specific data may have a smaller direct effect. Correlation between minor pairs and major pairs is common; for example, EUR/JPY often moves with USD/JPY and EUR/USD.
Often confused with
- minors in forex
- This entry covers minors in forex, which are non-dollar currency pairs; the visible sign is that neither currency in the pair is the US dollar.