5 Forex Currency Pair Nicknames Explained
Forex continues to be one of the world’s deepest markets with an average global daily turnover that exceeds $5trillion. The rise of online brokerages has demystified the investment world and made trading more easily accessible to millions. With everyone stuck at home due to the pandemic, there has been a significant surge in people being turned on by the possibility to trade on derivatives on a wide variety of assets, including cryptocurrencies, stocks, and currency pairs.
Despite access to trading being easier than ever, Forex still has a steep learning curve that can put a lot of beginners off. It’s an industry filled with technical jargon and esoteric lingo that is not easily comprehensible. For example, it’s common to hear many financial news sites and seasoned Forex traders make use of phrases such as “Cable is rising” or “Fiber is experiencing volatility” in reference to the foreign exchange market. What do these terms refer to and why are they even used in the first place?
Here we break down five of the most popular currency pair nicknames and delve into their origins.
Cable – GBP/USD
Dating all the way back to the mid-19th century, Cable is a term that came to refer to the exchange rate between GBP and USD. Back then, dollar and sterling prices were transmitted between New York and London by way of steel communications cables laid beneath the Atlantic Ocean. Exchange rates between these two powerful nations were literally communicated via cables. As such, the currency pair became known as Cable and has remained in use among traders ever since. Up until relatively recently, Cable was also the most liquid forex trading pair in the world.
Fiber – EUR/USD
Today, Fiber has overtaken Cable as the most popular trading pair in the Forex market. Fiber came about in 1999 with the launch of the Euro. Traders wanted the newly created EUR/USD currency pair to have a similarly fitting nickname to the ever-popular Cable. As traders believed that EUR/USD would be an upgrade from GBP/USD, they took inspiration from the lightning fast fiber optics which had superseded old fashioned cable lines. Hence, Fiber was born.
Chunnel – EUR/GBP
We’ve explored GBP/USD and EUR/USD, now we delve into EUR/GBP, which is more commonly known as Chunnel. The term merges “channel” and “tunnel” and is a reference to the Channel Tunnel that connects mainland Britain to Europe via an underwater railway tunnel that leads to France. Rather coincidentally, the Channel Tunnel was completed around the same time as the Euro was launched. As such, it made for fitting inspiration for this currency pair nickname.
Loonie – USD/CAD
Arguably the strangest Forex nickname of them all is the Loonie, which represents the US dollar and Canadian dollar currency pair. While it’s easy to think the term was concocted by supercilious American traders as an amusing dig at their Maple leafed neighbours, the term actually derives from Canada’s golden $1 coin, which sports a design of a common loon bird on its flip side.
Ninja – USD/JPY
It’s probably not that difficult to deduct which currency pair the Ninja refers to. As an epithet for the US dollar and Japanese Yen currency pair, the nickname derives from the traditional ninja warriors, which remain such a distinguishable part of Japanese culture around the world. Perhaps in an effort to move away from what can be perceived as a simplistic racial stereotype, many traders now simply refer to the USD/JPY currency pair as the Yen.
There are other currency pair nicknames out there, many of which are more self-explanatory, including the Aussie in reference to the AUD/USD and the Swissy for EUR/CHF. All in all, these terms are a much more convenient way to refer to currency pairs and a whole lot easier to remember.