What is a cross?

When you see a currency pair none of the two components of which is the US dollar (USD), you're seeing what forex guys call a cross. One of the most important example of a cross is: ZAR/VND (South African Rand vs. Vietnamese Dong). :-) Just joking!

Seriously, some examples of liquid crosses are EUR/GBP (euro vs British pound), GBP/JPY (British pound vs. Japanese yen), EUR/JPY, AUD/NZD (Australian vs. New Zealand dollar), etc.

Typically, spreads are wider with cross currency pairs.

In the past when a person wanted to exchange some money into a different currency, he would be required to first convert that money into US dollars. After that, he would have to convert it into the currency of his choice. Cross currencies help traders bypass this step. The AUD/JPY cross, for example, was invented to help individuals in Australia and Japan who wished to convert their money directly.