Cross Rate
An exchange rate between two currencies where neither is the domestic base currency.
Quick answer
A cross rate is an exchange rate between two currencies, neither of which is the local base currency.
Definition
A cross rate is an exchange rate between two currencies when neither is the domestic currency of the trader or the pricing centre. Common crosses like EUR/JPY and GBP/CHF are quoted directly rather than derived through the US dollar. Crosses often carry wider spreads and different volatility than major pairs.
How It Works
- It is quoted directly, not through the dollar
- Crosses can have wider spreads than majors
- Volatility profiles differ across crosses
Trading Tips
1
Size crosses with their wider spread in mind
2
Read the pair in the context of both base economies
3
Watch them closely around central bank events
Related Terms
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