Forex trading is a global market that operates round the clock, five days a week. The foreign exchange market is divided into three major trading sessions, namely the Asian, European, and North American trading sessions. Each session has its own unique characteristics and trading hours.
The Asian trading session is the first session to open in the forex market, and it is also referred to as the Tokyo session. This session starts at 7:00 PM EST (12:00 AM GMT) and ends at 4:00 AM EST (9:00 AM GMT). The Asian trading session is known for its low volatility and liquidity. During this session, the major financial centers that are active are Tokyo, Singapore, and Hong Kong.
The Asian session is also characterized by lower trading volumes compared to the other two sessions. This is because the European and North American traders have not yet joined the market. However, the Asian session is still important in the forex market, as it sets the tone for the rest of the trading day.
The Asian session is known for its stability and predictability, which makes it ideal for traders who prefer a more calm and controlled market. The currency pairs that are most active during this session are the USD/JPY, AUD/USD, and NZD/USD. These pairs are heavily influenced by the economic data releases from Japan, Australia, and New Zealand.
One of the major events that traders should be aware of during the Asian session is the Bank of Japan’s monetary policy announcement. The Bank of Japan sets interest rates and monetary policy for Japan, which can have a significant impact on the Japanese yen and other Asian currencies. Traders should also pay attention to economic data releases from China and Australia, as these can also affect the Asian currencies.
Another factor that affects the Asian session is the carry trade. The carry trade is a strategy where traders borrow in a low-yielding currency and invest in a higher-yielding currency, earning the difference in interest rates. During the Asian session, traders often take positions in the Japanese yen, which is a low-yielding currency, and invest in higher-yielding currencies such as the Australian dollar and the New Zealand dollar.
In conclusion, the Asian trading session is the first session to open in the forex market, and it is known for its stability and predictability. This session starts at 7:00 PM EST (12:00 AM GMT) and ends at 4:00 AM EST (9:00 AM GMT). Traders should pay attention to the Bank of Japan’s monetary policy announcement and economic data releases from China and Australia, as these can affect the Asian currencies. The Asian session is ideal for traders who prefer a more calm and controlled market, and the currency pairs that are most active during this session are the USD/JPY, AUD/USD, and NZD/USD.
