The foreign exchange market is the largest in the world with the largest market center located in London. There are two-sub market of currency markets, which include the spot market and the forward market. Spot market transactions are immediate exchanges of currencies, but usually take up to two business days to close whereas in the forward market, transactions will occur at a set future date. Spot exchange rate is the current exchange rate used when a buyer wants to purchase a currency with another currency. Newspapers, including LA Times, OC Register, as well as Wall Street Journal; provide spot exchange rates daily. The spot exchange rates are listed in four major quotes, which include spot price, 30-day, 90-day, and 180-day. Participants in the spot market include commercial and investment banks, corporations, individual traders, and central banks.

Most of the daily volume of forex market is done on the interbank market. The interbank market is where commercial and investment banks trade currency. When non-bank customers ask for spot quotes, spot quotations are listed as direct quotes. The direct quote shows the relationship between two currencies and represents the home currency price of one unit of foreign currency. For example, if the spot rate was given to you as 1.4/ US $. The numerator indicates which currency is the home currency. In this case, the home currency is the Euro. In order to get the indirect quote, the reciprocal of the direct quote is calculated.

Brokers charge a bid-ask spread as a fee for their services. The bid-ask spread is the difference between the bid price, the price that one can sell a currency, and the ask price, the price at which you can buy a currency. When one calls to ask for a bid or ask price, the broker is unaware of whether you are interested in buying or selling currency, and therefore gives you both the bid and ask price. For example, suppose the spot quote is given as €. 7243-65/ US $. In this spot exchange quote, the first number (€ .7243) represents the bid price, and the second number (€ .7265) represents the ask price.

References:

http://www.gocurrency.com/articles/stories-fx-market.htm, http://www.ny.frb.org/education/fx/foreign.html