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Tight Clocks in a Tight Week

While daylight savings time still prevails in North America, European countries already shifted their clocks towards the winter. This anomaly will last only one week – but it’s the most likely the most tight week of the year. Here’s how this will impact trading.

The New York and London sessions are the most intense and usually the most volatile in the forex market. Both cities are major global financial centers.

During four hours, between 12:00 to 16:00 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 12:30 and 14:00 GMT.

After the shift of the clock in Europe, including Britain, 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.

This is one of the busiest weeks in the year, with the FOMC meeting about QE2 being the major events that the markets are waiting for in the past two months. Add the monthly circus of the Non-Farm Payrolls, rate decisions in Australia, Japan, the Euro-zone and Britain and lots of other releases typical to the first week of the month, and you get busy trading with an extra hour of high volatility.

In addition, this makes events closer to each other. Thursday and Friday are the best examples. On Thursday, the British rate decision is released just 30 minutes before the US unemployment claims, and the European rate decision only 15 minutes afterwards. This promises high volatility in both EUR/USD and GBP/USD.

On Frid’ay, British PPI and European retail sales got closer to the almighty Non-Farm Payrolls and the employment numbers in Canada, that always rock the Canadian dollar. A special “treat” expects EUR/CAD traders – German factory orders, coincide with the Canadian employment figures. Both are released at the same time – 11:00 GMT.

Next week things will get to normal – at least regarding the clock shift. The markets will probably continue shaking on the echoes of QE2 and on fresh news.

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.