Before you trade, you should know the basics behind the major currencies you have to choose from. Each has special characteristics which may help you decide what to trade depending on current economic conditions

This is simple Forex training so we're going to keep things simple, you need to choose one currency and only one currency when you first start trading. If you try to watch too many currencies, you will split your attention in too many different directions and you may end up making poor trading decisions resulting in losing trades. Keep it simple, learn the high / low for the day, the high / low for the week, the high / low for the month, and the high / low for the year. These ranges will help you decide whether a currency is overbought or oversold. You should also use the economic calendar in the Newsroom to keep track of upcoming economic events involving your 2 countries on that currency pair.

Individual Characteristics of each Currency

Each currency has its own personality of sorts, and it's good to know the personalities of the curreny pair you're going to trade. This is also some absolutely necessary, fundamental information if you are serious Forex trader. Certain currencies are heavily tied to certain commodities, being able to identify strong trends in currencies will greatly increase your rate of return in the Forex market.

The United States Dollar:
90% of all transactions in the world involve the United States dollar. The gross national product of 2008 is estimated at $14.29 trillion. The U.S. used to absorb as much as 70% of the world savings. This is why the 2008 financial crisis was a global meltdown instead of just an American meltdown. We are the world's buyer, we purchase what other countries produce and this creates a trade deficit of around 700 billion each year. Which means we need 2 billion in capital inflow (i.e. investors worldwide adding money to those savings accounts) everyday just to balance out our trade deficit.

Special characteristics:
the US dollar has a strong negative correlation with the price of gold. Simply, as gold rises the US dollar was down, as gold sinks the US dollar goes up.

The Great Britain Pound:
The UK is the world capital for the Forex trading Market, the market has the highest volume during the London session, and the highest volatility during the United States UK crossover time. Which is 8 AM to 12 noon Monday through Friday. Currently the UK is inextricably tied to the other European nations. Those nations account for over 50% of all imports and exports with the UK. So as the buying power of all European countries sinks, the Gross National Product of Great Britain sinks as well.

Special characteristics:
The Great Britain pound has a strong positive correlation to energy prices. This is because energy production accounts for about 10% of the UK's Gross Domestic Product.

The Euro
This is the newest currency in the Forex market. This currency is based upon the European Union which consists of 16 official countries and several unofficial. Its largest member is Germany (strongest economy), followed by France and Italy.

Special characteristics:
The Euro has a strong positive correlation to the price of gold. As gold goes up so does the Euro and vice versa.

Canadian Dollar:
Canada has an incredibly strong economy which runs both the trade and budget surplus. However, it is tied at the hip with the US as the United States purchases around 85% of Canada's exports, about one third of its gross domestic product.

Special characteristics:
Canada is the 5th largest producer of gold and the 14th largest producer of oil, this makes it a commodity currency. It will always have a positive correlation with these two commodities.

Japanese Yen:
Japan is an export driven economy. They sell their products all over the world and that's their primary source of income. When the yen is weak against other currencies their exporters actually make more money. So the government looks out for their big exporters and keeps the yen weak. They will actually flood the market with yen in order to help keep the cost of exporting down.

Special characteristics:
Japan is the second largest consumer of oil after the United States. So they have a strong negative correlation to the price of energy.

Swiss Franc:
Switzerland accounts for around 35% of the worlds wealth management. And the country is home to several major banks including UBS and CSFB.

Special characteristics:
the Swiss franc much like gold is considered a safe haven currency because of the Swiss' historic neutrality. In times of political instability the Swiss franc will strengthen. The
Swiss Franc also has a positive correlation with gold.

Australian and New Zealand Dollars:
Australia and New Zealand have very similar economies. They're both commodity currencies as they are both big exporters. They explort agricultural products, gold and metals. Some fundamentalists also keep an eye on severe weather as droughts can cause problems for their exports.

Special characteristics:
Has a strong positive correlation with gold and other metals.


Summary:
There are some trades that are good during certain economic times. For example, if you know that oil is going to go up then going long the Canadian/Japanese currency pair is an excellent trade.  As the price of oil rises, the Canadian dollar will go up because they export so much, wheras the Japanese yen will go down because they consume so much.

Similarly if the investors are panicking all over the world then you know that gold and the Swiss franc, which are considered safe havens, are good trades to make.