Forex quotes are used by currency brokers to post bid and ask prices for the current spot market rates. These rates are in turn used by traders, speculators and hedgers. For one to use these quotes one has to understand the usage of these spot quotes.

There are several components of a currency spot market quote. First there is the currency pair which consists of the base currency and the counter currency. With the pair there are two types of quotes: direct and indirect.

A direct currency quote is simply a currency pair in which the domestic currency is the base currency; while an indirect quote, is a currency pair where the domestic currency is the quoted currency. So if you were looking at the Japanese Yen as the domestic currency and U.S. dollar as the foreign currency, a direct quote would be JPY/USD, while an indirect quote would be USD/JPY. The direct quote varies the foreign currency, and the quoted, or domestic currency, remains fixed at one unit. In the indirect quote, on the other hand, the domestic currency is variable and the foreign currency is fixed at one unit. (Investopedia.com)

The other components are: bid price, ask price, pip and spread. The bid price is the lowest price within the spread and the ask is the highest. The bid is the price the dealer will purchase from the market participants and the ask is where the dealer sells to the market. (Investopedia.com) In essence this is how the currency brokers get compensated is through the bid ask spread. An example is an indirect quote of USD/JPY 110.99/111.02 the left is the bid and the right is the ask. This concept ties into the next component of pips and spread. The pip is the smallest currency fluctuation tick by tick and the spread is the difference in pips of the bid and ask spread. (Investopedia.com) There are currencies that have ranges of hundreds of pips per day due to market volatility and liquidity and some have small ranges as well. Examples of currencies with high swings are the currency crosses such as the EUR/JPY and the GBP/JPY while ones that have minimal swings are those of AUD/USD or NZD/USD. When economic news breaks pertaining to a specific currency the spreads can widen due to the increased volatility of the pair at the current moment. Instead of having a spread of about 1-2 pips it can widen to 10 due to the fast market conditions.

In conclusion currency quotes illustrate what the current rate would be if one would like to initiate a position in the spot currency markets.

References:

"Forex Tutorial: Reading a Forex Quote and Understanding the Jargon." Investopedia.com. 10 Jan 2009. Forbes, Web. 2 Dec 2009. <http://www.investopedia.com/university/forexmarket/forex2.asp>.