The foreign exchange (forex) market is the most significant and liquid of all financial markets, with an estimated daily turnover of more than $5.1 trillion globally. Australia is home to one of the most active forex markets with a trading volume that rivals many other major currency trading hubs worldwide. It allows traders to potentially capitalise on opportunities for both short-term and long-term investments.
When looking to trade in the forex market, timing can be critical to success. Factors such as different countries’ opening times, varying liquidity levels at certain times and the implications of different trading strategies must all be considered when determining the best time to trade. This article will provide an overview of the critical times for trading on the Australian forex market, discussing the most advantageous periods in more detail.
Early morning trading
The early morning trading period is generally considered the most advantageous for forex traders in Australia because liquidity levels are highest during this time, which provides more opportunities for profitable trades. The Asian session begins at 9:00 p.m. GMT on Sunday and closes at 08:00 GMT on Monday morning.
During this period, the Australian dollar (AUD) represents a large percentage of overall currency trading volume, with AUD/USD being particularly popular among traders. As such, any news or events that impact the value of the AUD can provide significant advantages for those who can act quickly. You can check updated news and events on your chosen forex trading platform. Some of the key markets in Asia – including China and Japan – open around 02:00 GMT each day, providing additional opportunities for AUD traders.
Early European session
The early European session is another critical time for trading on the Australian forex market. This period begins at 03:00 GMT and ends at 07:00 GMT each day. During this window, there is significant activity from both Asian and European markets, making it an ideal time to take advantage of news and events that can impact currency values.
The British pound (GBP), euro (EUR) and US dollar (USD) are all highly traded during this period. In addition, the risk-on sentiment seen during this time can provide more volatile conditions that may offer advantages or disadvantages depending on one’s trading strategy.
Late European session
The late European session is another critical time for forex traders in Australia, beginning at 10:00 GMT and ending at 15:30 GMT each day. During this period, most currencies traded on the Australian forex market originate from Europe – including the euro, British pound, and Swiss franc – making this a potentially good time for traders who can accurately predict currency movements.
One of the forex tips we want to offer is that the US dollar is also highly traded during this window, offering even more excellent opportunities for those looking to capitalise on fluctuations in currency values. It would be best to note that this window is more volatile than other times due to the close of critical European markets.
US morning session
The US morning session begins at midnight GMT each day and ends at 05:00 GMT on Tuesday morning. It is one of Australia’s busiest times for forex trading, with high liquidity levels and significant market activity. As the name suggests, this window mainly focuses on US markets, with the US dollar being the most heavily traded currency on the Australian forex market during this time.
This period also sees high levels of volatility due to the release of economic data from the United States and news and events related to USD-denominated assets. Traders should be aware of the impact events such as US Federal Reserve meetings and economic reports can have on currency values.
US afternoon session
The US afternoon session begins at 10:00 GMT daily and ends at 15:30 GMT on Tuesday morning. Like its morning counterpart, this is another busy period for traders looking to take advantage of trends in USD-denominated assets or monitor news related to America’s economy.
The liquidity level tends to be lower than in the morning session, and there is less volatility overall. This window better suits those looking for more gradual currency movements. This period can coincide with news releases from other countries, such as Australia or Japan, providing opportunities for traders depending on their strategies.
The late-night trading period begins at 20:00 GMT daily and ends at 23:30 GMT on Tuesday morning. It is considered one of the quieter periods in the Australian forex market, where liquidity levels are lower, and trading activity is limited due to most major markets being closed or winding down. As such, there may be better times for traders looking to take advantage of short-term trends or volatile movements in currency values. However, this window may be better suited for those looking to monitor news and events impacting currency values over the longer term.