What are the key daily events in the FOREX market

Unlike stock markets, forex markets are open to trade 24 hours a day and most trading platforms trade from Sunday evening to Friday evening. This means that during the week buyers and sellers of currencies literally chase the sun around the world. As currency markets don’t have their own official open or close times, traders often use the opening of the regional stock markets as the start of the most active period of currency price movements. The opening of stock markets often indicates investor confidence and currencies often react to large early movements in stock markets. These movements may coincide with high-impact news and results, such as interest rate decisions which will also create key moments in these early parts of the day. The domino effect of news and events on  equity, commodity and currency markets can be observed every trading day.

Since the Asian market is the first to begin the day, ending around the time that the European market opens, a trader living in London could be active both day and night. The performance of the Asian market often sets the tone for the day with the European and the US markets following suit and each taking over in directing the order of play. The opening of each of these regions often sees the most frenetic fluctuations in price as the bulls and the bears battle it out to dominate that day’s general trend. Volatile currency pairs, such as the GBP/JPY can be very active across all three regional markets as the pair attracts interest from both eastern and western traders. Similarly, the EUR/USD is most active when the two regional markets overlap between 7-10AM EST. This opening of the US economy undoubtedly has the ability to reverse or continue any previous currency movements as the world looks towards the strongest economy to influence the interlinked and relative values of currencies.

Many key events in the daily FOREX markets are those where all traders are aware of imminent news events but are unsure of the precise nature of the news. The releases of interest rate decisions and employment figures have the most tumultuous impact on currency markets. Prior to these events many traders and economists make predictions and analyse the prospective changes in both interest rates and employment figures. Positions are often taken before the news is released as well as seconds after in order to catch the large movements that are almost always created. Markets often become highly volatile as traders try to jump on the movement whilst others try to get out of losing positions. These highly-volatile events happen relatively frequently with data from every country affecting their repective currency pairs. For the USD, the single most poignant event is the release of US non-farm payroll data which has the potential to send shockwaves through dollar and global markets on the first Friday of each month.

When equity markets are closed overnight many currency pairs drift slowly, with low movement and high spreads preventing many from trading.  Traders often place orders at key support levels and when price drifts to these the low volumes can allow good trading opportunities around these areas. As the opening of the working day approaches, the movement of price and the volume of traders increase. Many traders enjoy this pre-market as the spreads narrow and the reduced volume allows a certain amount of predictability of where price will find firmer resistance or support. Whatever the market, with the opening bell of the major stock exchanges an often frenetic and unpredictable scramble of buyers and sellers ensue with their own predictions, strategies and market analysis.