Forex technikal and fundamental analysis: Forex Crunch Asian Session

May 20, 2010

Forex Crunch Asian Session – Not so quiet anymore

Posted: 20 May 2010 02:00 AM PDT

The Asian session, when Europeans are asleep, is considered a more quiet time in the forex market. But the times they are a-changin – the Asian session is becoming more volatile. Here are the reasons for this change and who can benefit from it.

As the Greek crisis continues to be a dominant issue that dominates EUR/USD and other currencies as well, every statement made during the weekend and every international conference can create a different start to the week – currencies trade in a significant gap from the close on Friday. In most cases, this gap is filled, but it still creates lots of action, while it’s still Sunday in the US and night time in Europe. But it’s not only on Sunday:

The Chinese yuan isn’t traded, but as China is an economic superpower, every economic release from this giant has an impact on the forex market. Japanese and Australian figures have an impact on the local currencies, but Chinese figures tend to impact the dollar as well. With the ongoing Chinese growth, these figures will have a stronger impact on the markets.

Note that also other economies in the Far East have more impact: important events from India, South Korea and even Singapore have an impact on the markets.

Another contribution to volatility in the Asian session comes from the US: speeches from Federal Reserve officials that are delivered in the American evening, during the Asian session, also shake the markets. As the uncertainty towards the central bank’s monetary policy grows, every hint shakes the markets at these times as well.

For European traders that prefer sleeping during the night, this new action in the Asian session means that they should close positions if they want to have a risk free night. Making money while you sleep sounds good, but this may not necessarily be the case.

For American traders, this is an opportunity to trade during after hours. Most retail forex traders hold on to a day job, and don’t always like trading during work hours. The action in Asia happens during the evening time in the US. If you have a free evening, you can find the action in the markets.

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Forex Daily Outlook – May 20 2010

Posted: 19 May 2010 02:00 PM PDT

US Philly Fed Manufacturing Index is released; Unemployment Claims are expected to drop once again, CB Leading Index is heading for a decrease. This and more awaits us today.

In the US, Philly Fed Manufacturing Index, survey of about 250 manufacturers in the Philadelphia Federal Reserve district which asks respondents to rate the relative level of general business conditions, measuring the level of a diffusion index based on surveyed manufacturers in Philadelphia, is about to rise up to 21.9 from 20.2. It’s a leading indicator of economic health and early signal of future economic activity such as spending, hiring, and investment.

More In the US, Unemployment Claims a data released weekly that measures the number of individuals who filed for unemployment insurance for the first time during the past week; is about to drop to 43,000 from 45,000 an important signal of overall economic health because consumer spending is highly correlated with labor-market conditions;

Later in the US, CB Leading Index is expected to drop from 1.4% to 0.3% and Natural Gas Storage will probably remain 94B.

In Canada, Leading Index designed to predict the direction of the economy is expected to drop to 0.7% after the previous rise of 1% in April.

Later in Canada, Bank of Canada’s Review is released quarterly reporting about the economy and central banking, from the Department of Monetary and Financial Analysis.

For more on USD/CAD, read the Canadian dollar forecast.

In Europe, German PPI is expected to drop by 0.1% from 0.7% in April signals lower inflation rates.

Also in Europe, Consumer Confidence is expected to continue its decrease by an additional point arriving at -16 points.

For more on the Euro, read the EUR/USD forecast and Casey Stubbs' latest analysis.

In Great Britain, Retail Sales are expected to drop by 0.1% from April’s 0.4% indicating less consumer purchases.

Read more about the Pound in the GBP/USD forecast.

In Switzerland, ZEW Economic Expectations is expected to remain in the realm of 53.4 points as in April showing an overall stable market activity.

More in Switzerland, SNB Governing Board Vice-Chairman Thomas Jordan speaks about monetary policy and its impact on the real economy, in Wettingen. Key Interest rates are to be affected and information revealed concerning future monetary policy.

In Australia, Melbourne Institute Inflation Expectations are believed to remain 4% as in April.

For more on the Aussie, read the AUD/USD forecast.

In New Zealand, Annual Budget Release outlines the government’s budget for the year, including expected spending and income levels, borrowing levels, financial objectives, and planned investments in case Domestic government spending is high it indicates a busy and healthy market activity.

More in New Zealand, Visitor Arrivals is hoped to remain 1.1% as in April’s rise after a continuing decrease in the previous months.

That’s it for today. Happy forex trading!

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