Forex or foreign exchange market is a decentralized market where currencies are bought and sold. This market operates 24 hours a day, five days a week, from Monday to Friday. However, there is one forex market that opens on Sundays, and that is the Asian or Tokyo Session.
The Asian Session, also known as the Tokyo Session, is the first market to open in the forex trading week. It starts at 6 pm EST on Sunday and closes at 4 am EST on Monday. The Asian Session covers the trading activities of the major financial centers in Asia, including Japan, China, Australia, and New Zealand.
The Asian Session is known for its low volatility and low liquidity compared to the other forex sessions. This is because most of the European and North American traders are not active during this time, which leads to fewer market participants and lower trading volumes. However, this doesn’t mean that there are no opportunities to trade during the Asian Session.
Traders who trade during the Asian Session focus on the currency pairs that involve the Japanese Yen. These pairs include USD/JPY, EUR/JPY, AUD/JPY, and NZD/JPY. The Japanese Yen is one of the most actively traded currencies in the forex market, and it often sees significant movements during the Asian Session due to the economic data releases from Japan.
Another reason why the Asian Session is important is that it sets the tone for the rest of the trading week. The market sentiment during the Asian Session can influence the trading activities of the other forex sessions. For example, if the Asian Session ends on a bullish note, it could lead to a bullish sentiment in the European and North American sessions.
In addition, the Asian Session is also important for traders who use the carry trade strategy. The carry trade strategy involves borrowing money in a low-interest-rate currency and investing it in a high-interest-rate currency. During the Asian Session, traders can monitor the interest rate differentials between the currencies and adjust their positions accordingly.
In conclusion, the Asian Session or Tokyo Session is the only forex market that opens on Sundays. It is known for its low volatility and low liquidity, but it still offers trading opportunities, especially for traders who focus on the Japanese Yen pairs. The Asian Session also sets the tone for the rest of the trading week and is important for traders who use the carry trade strategy.