The forex market is a fascinating entity, from its incredible daily trading volumes to the cumulative size of this space. Currently, it’s estimated that the forex market is worth a staggering $1.934 quadrillion, which is approximately 2.5-times larger than the world’s total GDP.
This actually highlights the global nature of the forex market, which is accessible for 24-hours each day and covers three distinct geographical trading sessions.
In this post, we’ll look at the Asian trading session and its core hours, while asking how you can trade during this period.
An Overview of the Asian Trading Session
Unofficially, the Asian trading session commences at 10pm GMT, which is when the Sydney stock exchange opens. This exchange subsequently closes at 7am GMT, although interestingly this doesn’t bring the Asian market to a close.
This is because the Tokyo exchange opens to traders at midnight GMT, before closing its virtual doors at 9am GMT. This officially brings the Asian trading session to a close, as this bleeds into the start of the European session.
The Asian session also kick-starts the forex trading week, when the Sydney stock exchange opens for business every Sunday at 10pm. The global market is then perennially accessible until the following Friday at 10pm GMT, when the New York session comes to a close.
The Asian trading is also deceptively large, as it covers the vast Asia-Pacific region and incorporates currencies from a number of seminal nations. These include China, Australia and Russia, with currencies from New Zealand, Japan and Hong Kong are also traded freely during this period.
During the last decade, this market has undoubtedly experienced a more significant influence from China, with traders paying increasingly close attention to the action of China’s central bank (the PBoC).
The way in which this entity regulates the Chinese yuan is of particular interest, with this currency now used widely to gauge sentiment in this marketplace and the likely performance of emerging currencies in Asia.
How to Trade the Asian Trading Session
Traders typically target periods of time during which different geographical forex trading sessions overlap, as this increases both volume and volatility while creating more significant price shifts for traders to leverage.
In the case of the Asian trading market, it’s interesting to note that the final hour of the Tokyo session overlaps with the first hour of the London equivalent, creating a short window of opportunity between the hours and 8am and 9am GMT.
OK, we hear you ask, but what currency pairings should be prioritised during this session? Well, the single most popular pairing is the USD/JPY, which is undoubtedly the most traded asset during the Asian session and one that accounts for nearly 20% of FX trades on a daily basis.
Both currencies are considered to be stable and relative safe havens, which means that they often chart predictable courses within specified time periods.
On a similar note, this pairing is also an exceptional barometer for the economic strength of the respective nations. More specifically, the JPY tends to strengthen when the US economy suffers, while the greenback soars periods of tumult in Asia.
This also offers an insight into the wider macroeconomic climate and factors such as unemployment rates, wages growth and industrial production, creating more opportunity for traders with a more diverse portfolio.
For similar reasons, the AUD/CHF is another popular pairing, especially given the increased influence of the Chinese yuan.
Once again, both currencies are economically intertwined, so it’s relatively easy to gauge sentiment and speculate on the direction of this pairing.