Sydney Session Forex Pairs – Which Pairs to Trade During Sydney Session?

Forex market operates around the clock, providing continuous market access to traders worldwide. 

The Forex market consists of numerous currency pairs, each possessing its distinctive characteristics. Certain currency pairs exhibit higher volatility than others, influenced by factors such as economic news releases, political developments, and prevailing market sentiment. 

It is possible to divide the Forex market into four major trading sessions: the Sydney session, the Tokyo session, the London session, and the New York session. 

For example, Sydney is open from 9:00 PM GMT to 6:00 AM GMT. 

Within the Sydney session, select currency pairs demonstrate heightened activity, presenting traders with opportunities to capitalize on market movements. So, let’s take a closer look at Sydney Session Forex Pairs.

Although the Sydney session primarily centers around Australia and New Zealand, its impact extends beyond these regions, although it may not constitute a significant portion of the overall market activity.

However, the Sydney session is more than just a regional market; it brings a unique set of dynamics to the world of Forex trading.

As you may be aware, the Sydney session marks the beginning of the trading week after the weekend hiatus. 

In essence, it serves as the first opportunity for traders to react to any significant developments that transpired during the weekend. 

Sydney Session Forex Pairs

It should come as no surprise that during the Sydney trading session, the Australian dollar, (AUD) is the prominent player.

It’s essential to understand that the AUD is categorized as a commodity currency, meaning its value is substantially influenced by the prices of certain commodities. 

While the United States isn’t Australia’s largest export destination, the AUD/USD currency pair stands out as the most liquid option for speculating on the Australian dollar’s strength.

AUD/JPY

In certain situations, you may wish to trade the Australian dollar while minimizing your exposure to external factors, especially those related to the US dollar, which often experiences substantial global inflows. 

For instance, you might anticipate that the Australian dollar will outperform its regional counterparts. Still, you’re concerned about potential choppy price movements in AUD/USD due to broader global factors, such as the US dollar’s influence.

This is where the AUD/JPY currency pair comes into play. Japan ranks as Australia’s second-largest export partner (China being the first, although Chinese currency isn’t as freely traded), making AUD/JPY an attractive option for localized exposure to the AUD’s value while maintaining decent liquidity.

New Zealand dollar and US dollar 

We also need to mention the New Zealand dollar when it comes to Sydney Session Forex Pairs.

New Zealand, comprising two main landmasses—the North Island and the South Island—along with over 700 smaller islands, boasts its own currency, the New Zealand dollar (NZD), often affectionately referred to as the “kiwi” by forex traders.

The NZD is actively traded during the Sydney session, making it a preferred choice for traders looking to engage in more dynamic currency movements during this timeframe.

New Zealand’s robust trade relationships and efficient agricultural system form the bedrock of its key exports, encompassing dairy products, meat, forest products, fruits, and beverages. Fluctuations in the prices of these goods can significantly influence the direction of the NZD, along with changes in petroleum prices, a significant import.

Trading the NZD in relation to the US dollar remains the most popular way to gain exposure to the kiwi.

USD/JPY

The USD/JPY currency pair ranks among the most widely traded pairs in the Forex market and is a logical choice during the Sydney session, particularly during the Tokyo overlap.

The USD, serving as the base currency in this pair, holds the distinction of being the world’s primary reserve currency. Consequently, it appears on the balance sheets of virtually every central bank and major financial institution as it’s the preferred means for settling international transactions.

This preeminent status places the United States in a privileged position. It underscores why economic news and developments pertaining to the US economy exert the most substantial influence on the foreign exchange market. 

Major currency pairs 

As we have already discussed Sydney Session Forex Pairs, we can discuss major currency pairs. 

Major currency pairs, often referred to as “majors,” are the most widely traded currency pairs in the Forex market. They represent some of the world’s strongest and most stable economies, making them the focus of many Forex traders and investors. 

Understanding these major currency pairs is crucial for anyone interested in Forex trading, as they offer liquidity, price transparency, and a wide range of trading opportunities.

Here, we will explore some of the major currency pairs, their characteristics, and the factors that influence their movements: 

EUR/USD (euro/US dollar):

The EUR/USD is the most actively traded currency pair in the world. The euro (EUR) represents the Eurozone, comprising 19 of the 27 European Union countries. 

The US dollar (USD) is the world’s primary reserve currency, driven by the economic strength of the United States.

Factors influencing this pair include interest rate differentials, economic data, political events, and global market sentiment. 

USD/JPY (US dollar/Japanese yen):

The USD/JPY is highly traded and offers liquidity due to the status of the US Dollar and the Japanese Yen (JPY). 

Japan’s economy is export-oriented, and the Yen is often used as a safe-haven currency. This pair is influenced by US economic data, Japanese monetary policy, and risk sentiment. 

GBP/USD (British pound/US dollar):

The GBP/USD is commonly referred to as the “Cable.” The British pound (GBP) represents the United Kingdom. The pair is sensitive to UK economic data, Brexit developments, and US economic indicators. 

AUD/USD (Australian dollar/US dollar)

The AUD/USD is a major pair offering exposure to the Australian economy and the US economy.

Commodity prices often influence the Australian Dollar (AUD) due to Australia’s significant natural resource exports. Economic data, commodity prices, and global economic conditions affect this pair.

USD/CHF (US dollar/Swiss franc):

The USD/CHF is characterized by the safe-haven status of the Swiss Franc (CHF).

Switzerland’s stability and strong financial sector make the Franc attractive in times of uncertainty. This pair is influenced by US economic indicators and global risk sentiment.

USD/CAD (US dollar/Canadian dollar):

The USD/CAD is influenced by the US Dollar and the Canadian Dollar (CAD).

Canada is a major oil producer, so this pair is sensitive to oil prices. Economic data from both countries, especially employment and GDP figures, impact this pair.

NZD/USD (New Zealand dollar/US dollar):

The NZD/USD represents the New Zealand Dollar (NZD) and the US Dollar. New Zealand’s economy relies on agricultural exports, making it sensitive to commodity prices. Factors affecting this pair include dairy prices, global risk sentiment, and economic data from both countries. 

EUR/GBP (euro/British pound)

The EUR/GBP represents the euro’s value relative to the British Pound. It is influenced by economic data from the Eurozone and the UK, as well as Brexit developments.

EUR/JPY (Euro/Japanese yen):

The EUR/JPY combines the euro and the Japanese yen. It is influenced by Eurozone economic data, Japanese monetary policy, and risk sentiment.

GBP/JPY (British pound/Japanese yen):

The GBP/JPY is characterized by volatility due to the British Pound and the Japanese Yen.

It is sensitive to UK economic data, Bank of Japan policies, and global risk appetite.

Successful trading in the Forex market often involves a deep understanding of these major currency pairs and the ability to adapt to changing market conditions.