Currency trading volumes in the
Asia-Pacific session account for about 21 % of total daily global volume,
according to the 2004 BIS survey. The principal financial trading centers are
Wellington, New Zealand, Sydney, Australia, Tokyo, Japan Hong Kong and
Singapore.
In terms of the most actively
traded currency pairs, that means news and data reports from New Zealand,
Australia and Japan are going to be hitting the market during this session. New
Zealand and Australian data reports are typically released in the early morning
local time, which corresponds to early evening hours in North America. Japanese
data is typically released just before 9 a.m. Tokyo time, which equates to
roughly 7 or 8 p.m. ET Some Japanese data reports and events also take place in
the Tokyo afternoon, which equates to roughly midnight to 4 a.m. ET.
The overall trading direction for
the NZD, AUD, and JPY can be set for the entire session depending on what news
and data reports are released and what they indicate.
In addition, news from China,
such as interest rate changes and official comments or currency policy
adjustments may also be released. Occasionally as well, late speakers from the
United States such as Federal Reserve officials speaking on the West Coast of
the United States may offer remarks on the U.S. economy or the direction of
U.S. interest rates that affect the value of the U.S. dollar against other
major currencies.
Because of the size of the
Japanese market and the importance of Japanese data to the market, much of the
action during the Asia-Pacific session is focused on the Japanese yen currency
pairs, such as USD/JPY and the JPY crosses, like EUR/JPY and AUD/JPY. Of course,
Japanese financial institutions are also most active during this session, so
you can frequently get a sense of what the Japanese market is doing based on
price movements.
For individual traders, overall
liquidity in the major currency pairs is more than sufficient, with generally
orderly price movements. In some less liquid, non-regional currencies, like
GBP/USD or USD/CAD, price movements may be more erratic or non-existent,
depending on the environment. With no Canadian news out for the next 12 hours,
for example, there may be little reason or interest to move that pair. But if a
large market participant needs to make a transaction in that pair, the price
movement could be larger than normal.
