Trading in minor currencies

Discussion in 'Forex' started by Convertibility, Aug 8, 2012.

  1. Hey guys,

    I have a fairly basic question to which I could not find an answer though, I hope some of you can help me out here.

    So I've read that most minor currencies are actually traded through a vehicle currency, e.g if somebody wants to trade the Mexican Peso against the Australian Dollar he's probably gonna do it through the Dollar or some other big currency. Now my question is, if minor currencies are traded like that, is the actual exchange rate MXN/AUD changed by that trade or are simply the MXN/USD and USD/AUD rates changed?
  2. To the extent your major currency trades change their prices, yes, you will impact the minor currency price (as it's simply a mathematical computation from the major currency values). But it takes a sizeable order to do that. A million $ might move the AUD.USD a half pip when thinly traded, for example, but typical orders by retail traders just get gobbled up.