Exchange markets work all the time. Their work in the calendar twenty-four-hour period is started in the Far East, in New Zealand (Wellington), passing the time zones in Sydney, Tokyo, Hong Kong, Singapore, Moscow, Frankfurt-on-Main, London, then finishing the day in New York and Los Angeles. The count of time zones begins from the zero meridian in Greenwich near London, and the time itself is called Greenwich Mean Time (GMT). Depending on the season (summer or winter), the time in different financial centers of the globe will differ from the GMT.
The working day of exchange brokers of Western commercial banks starts, as a rule, at 7:30 am by local time. At 8:00 am the dealers are already closing deals. The morning hours are usually devoted to short analyses of events on the international exchange markets at the moment. The dealers use economic and technical analyses of the situation in the market, read analytical articles in newspapers, then exchange points of view and the latest rumors with each other and with dealers from other commercial banks. On the basis of various data, a picture of possible behavior of the exchange rate on the coming day is put together, with variants of all sorts of possible events.
By 8:00 am the market, consisting of individual dealers, will have worked out the tactics of its behavior, and it enters the operations of the international exchange market, giving a new and powerful impulse to the movement of the exchange rate. Various territorial markets can be given the following characteristics of an average typical activity during a 24 hour day.
Far East. Here the most active deals in the market are conversion transactions with the dollar to the Japanese yen, the dollar to Euro, Euro to yen, and the dollar to the Australian dollar. Very often fluctuations of exchange rates at that time are insignificant, but there are days when currencies, especially the dollar against the yen, make breath-taking flights. Especially so when the central bank of Japan makes an intervention. In Moscow its night and morning at that time, so till noon one can work with Tokyo, till mid-day with Singapore.
Western Europe. At 10:00 am Moscow time the market in the European financial centers of Zurich, Frankfurt-on-Main, Paris, Luxembourg are open. However, the really powerful movement of the exchange rate against the main currencies starts after 11:00 am Moscow time, when the London market is opened. This continues, as a rule, for 2 to 3 hours, after that the dealers of the European banks go to have lunch, and the activity of the market falls down a bit.
North America. The situation livens up with the opening of the New York market at 4:00 pm Moscow time, when dealers of American banks start working, and when European dealers come back from their lunch. Powers of European and American banks are about equal, that is why fluctuations of the rate do not go out of the limits of usual European fluctuations.
Nevertheless, exchange dealers look forward to the opening of the New York market in order to receive fresh data about a possible movement of the rate (the more so if the European market has been sluggish). But when the European market is closed about 7p m or 8pm Moscow time, aggressive American banks, left alone on the “thin” market, are able to cause a sharp change of the exchange rate of the dollar against other currencies.
