Impact of Clock Shift On Forex

Posted on March 14, 2010 by Yohay
Filed Under Other Forex Stuff | 4 Comments

In the US and Canada it’s already summer – at least according to their clocks – they’ve just moved to daylight saving time. European countries make this shift only in two weeks from now. This difference has an impact on forex trading. Let’s see how.

The London and New York sessions are the most intensive and usually the most volatile in the forex market. Both cities are major global financial centers. The London session is between 8:00 to 17:00 GMT and the New York session is between 13:00 to 22:00 GMT.

During four hours, between 13:00 to 17:00 GMT, the sessions overlap. The European afternoon / American morning is the busiest time. During these four hours, major figures are released in the US: most of them at 13:30 and 15:00 GMT.

After the shift of the clock in the US and Canada, as seen in Forex Factory’s calendar, the overlapping period is increased from 4 to 5 hours – from 12:00 to 17:00 GMT. This means that the major action will start earlier for Europeans / will end later for Americans. This extra hour of high volume and high volatility is of high importance for day traders. More action.

Special impact

This two week period of high volatility will probably have a stronger impact on one specific pair: GBP/USD. Most British economic indicators are released at 9:30 GMT. The DST shift makes the British releases significantly closer to the American ones, leaving less time for traders and analysts to digest and react to British news before American ones come in. This will probably lead to more volatility in GBP/USD.

European releases are scattered throughout the European morning, but there are cases in which important figures are released at 10:00 GMT, making them closer to American releases. The best example is this Tuesday, when the ZEW economic sentiment and European CPI are released at 10:00 GMT, and American Housing Starts and Building Permits are released at 12:30 GMT. This smaller gap between the releases, all of them of high importance, will provide more action than usual to EUR/USD.

Another currency to note in this context is the Canadian dollar. Also Canada’s clock was moved. In Canada, some publications are made earlier than in the US: at 12:00 GMT. Now it becomes 11:00 GMT. This Friday, Canadian CPI will be released at this time, close to European and British events, making the Canadian crosses more volatile.

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Comments

4 Responses to “Impact of Clock Shift On Forex”

  1. Forex Daily Outlook – March 16th 2010 | Forex Crunch on March 15th, 2010 11:02 pm

    [...] strong volatility seen on Monday’s trading was also influenced by the different time difference between Europe and North America. This will accompany us for two more [...]

  2. Forex: Major Releases in Europe and Rate Decision in the U.S. on March 16th, 2010 3:56 pm

    [...] strong volatility seen on Monday’s trading was also influenced by the different time difference between Europe and North America. This will accompany us for two more [...]

  3. Matt on March 18th, 2010 3:12 am

    Yoyah, this is the sort of thing that you so clearly do well and explain informatively as usual. Really useful post friend. Thanks and much appreciated.

  4. Forex Weekly Outlook – March 22-26 | Forex Crunch on March 20th, 2010 12:01 pm

    [...] in the upcoming week, there’s a smaller-than-usual time difference between North America and Europe. This gives one extra overlapping hour, making day traders more [...]

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