FOREX currency trading in Asia is carried out in the main financial centers of that region during the Asian trading session, also known as the Asian session (hours: 7 p.m. to 4 p.m. EST time). During this session, Tokyo has the most significant share in the market, followed by Hong Kong and Singapore. Currently, Tokyo is one of the leading centers of financial transactions not only in Asia but worldwide.
It is the first crucial financial market to open during the day, and many significant market players regularly use the rhythm of the negotiations that take place there as a reference to determine the dynamics of the market at that time, as well as to develop their strategies of negotiation. During the Asian session, the trading volume can sometimes be small. However, this period is known as a space in which large investors such as hedge funds and the most important investment banks carry out stops and barriers of significant options. The main market participants during the Asian session are commercial companies (exporters) and central banks among others. It must be remembered that Japan's economy depends heavily on exports and this country is one of the largest exporters today. China is also one of the largest commercial players in the world (and the markets in China are more active in that period), causing a large volume of transactions to occur daily in the Asian markets every day. In spite of what has been stated in the previous point, liquidity can sometimes be low during the Asian session. Therefore, for the trader, there will be times when it will be difficult to find good opportunities in the market since there will be few movements and the conditions will not be the best. Currently, the movement of currency pairs has not been very significant compared to other sessions of the market, although there are always opportunities. The Asian session is relatively quiet and therefore it’s not the most suitable for traders who expect to obtain high profits with extensive and rapid movements of quotes, such as in the European session or the American session for example. The economy in China is currently growing at its lowest level in the last 25 years and is expected to decline further as export demand decreases and the Government shifts its economic objective towards consumption and services. To counter this, China has promised a more proactive fiscal policy, pledging to increase control over the debt of local governments in their attempt to maintain stable growth. We are also in a moment of great concern about the yuan, which has slipped to eight-year lows in the midst of capital outflows. It is convenient to monitor the USD / CNH; It will also be interesting to monitor the prices of raw materials and related values.
What has been the status of the Asian FOREX market?
In the trading of raw materials, the price of oil has recovered during the hiring hours of Asia while operators continue to look at the conflicts between Israel and Iran. The cost of gold, at the same time, has slightly corrected to the downside, penalized by the stability of the Dollar. Looking to the future, the shortage of fundamentals in the calendar will be the protagonist today, together with small volumes. However, the data on current accounts and the construction sector of the Eurozone stand out.
What are the most recommended currency pairs during the Asian session?
Because the most important news from Japan, Australia, and New Zealand are released during the Asian session, this period presents good opportunities to conduct operations based on news events in the market. There may be quite a movement in yen currency pairs such as GBP / JPY or EUR / JPY, since a large amount of yen changes hands because Japanese companies conduct most of their business to those yen. For traders with greater risk tolerance, currency pairs such as GBP / JPY, USD / JPY or GBP / USD are good options during the Asian session since they have wide price ranges, which allow short-term operators obtain high profits in a short time thanks to movements of the order of 90 pips or more. During this period, large institutional investors and foreign investment banks that hold most of their assets in US dollars produce a significant number of transactions in the USD / JPY each time they enter into stock and equity markets. In turn, the Central Bank of Japan, which holds more than 800 billion dollars of US Treasury debt, plays an important role that significantly influences the demand and supply of the USD / JPY due to its transactions in the open market. Besides, another important and well-known aspect is that Japan's large exporters use the trading hours of the Tokyo market to bring their profits abroad, which intensifies the fluctuations of the yen's currency pairs. Pairings such as GBP / JPY, EUR / JPY, and GBP / CHF experience high volatility, as central banks and other major players in the market begin to position themselves in preparation for the European session. In the case of traders with higher risk aversion, currency pairs such as AUD / JPY, EUR / USD and EUR / CHF are suitable options during the Asian session, since they present lower volatility and therefore allow medium and long-term investors analyze fundamental factors when deciding their operations.