When Are the Best Times to Trade the Dollar?

tumblr_n9fxhrrdrw1tekfk9o1_1280The US dollar (USD) is without doubt the most important and popular currency in the world, as it has been for many years, followed by the Euro (EUR), Japanese Yen (JPY) and British Pound Sterling (GBP). We are able to judge long and short-term price action by looking at the dollar’s value relative to the following currencies and weighting:

Euro (EUR) 57.6%; Japanese Yen (JPY) 13.6%; British Pound Sterling (GBP) 11.9%; Canadian Dollar (CAD) 9.1%; Swedish Krona (SEK) 4.2% and Swiss Franc (CHF) 3.6%

It is practical to trade on the dollar’s strength and weakness through currency pairing – a currency pair being defined as the quotation of the relative value of a currency unit against the unit of another currency in the foreign exchange market. The currencies listed above constitute the main “crosses” for trading purposes.

The USD’s continuing trading hours are between Sunday evening and Friday afternoon in the United States although of course both the volume of trading and the volatility of trading can vary substantially. The trading pair on which most Forex traders concentrate is the EUR/USD cross which has been described as “the most popular and liquid currency market in the world”.

So what are the factors which make for profitable trading at what particular hours of the non-stop trading day? One major one which involves constant research and updating is the release of new and important economic data. Look out for the announcement dates and times for the following five reports: the trade balance report, the Nonfarm Payroll Employment Report, the GrossDomestic Product, Retail Sales and Industrial Production. Four of these are released monthly at the same time each month.

You should also factor in the times when the Federal Reserve schedules announcements as well as those made by other central banks.

There are plenty of good opportunities for dollar traders provided by the six popular “pairs” and it is generally thought that the best times to do these trades s are mainly before and after economic releases in in the U.S. and other centres, with active forex trading between the late evening U.S. Eastern Time and around midday the following day.

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