The New York session

When the session runs 

The New York session is the last of the three the trading day is conventionally divided into, and for a reader in the Gulf it is the one that runs latest. It opens as North American dealing desks arrive, which is the middle of London's afternoon, and closes when those desks go home, which is the small hours of the next morning in Gulf Standard Time. Its opening hours fall in the Gulf early evening and its closing hours after midnight, on what is locally the following date.

The hours below describe where the participants are, not when a bell rings. The currency market has no bell, so a boundary there marks a concentration of people and nothing else. The US share and ETF markets do have one, and its hours are narrower than the session around it. Confusing the two is how this part of the day is most often misread.

Two clock changes a year move this session against the Gulf, and neither of them is a Gulf event. North America shifts to daylight saving in spring and back in autumn while Gulf Standard Time stays where it is, so the session arrives an hour earlier for part of the year and an hour later for the rest, on a calendar set thousands of miles away.

Why the data lands early in the session 

The clustering of US releases into the opening stretch of the New York morning is administrative rather than mysterious. The federal statistical agencies, principally the Bureau of Labor Statistics, the Bureau of Economic Analysis and the Census Bureau, publish to a calendar set a year ahead, hold each number under embargo until a fixed local hour, then release it to everyone at once. Because that hour is fixed and shared, one slot carries the employment report, the consumer price index, retail sales and the weekly jobless claims, each on its own day.

That slot sits before the US cash equity market opens, and the gap is deliberate: currency and futures markets are already trading when a number lands, so a figure is absorbed by open markets before the market with an opening auction has to price it. Survey based indicators tend to arrive in a later slot, and the Federal Reserve's policy statement lands in the early afternoon with a press conference behind it.

At the release timestamp, a number that participants have positioned around stops being an estimate and becomes a fact, and what moves prices is the distance between that figure and what was already priced, which is why a weak number and a rising market are an ordinary pair rather than a contradiction. Liquidity providers commonly widen their quotes or step back from quoting around the same timestamp, since the risk of showing a stale price is highest in those seconds, so the movement and the thinning of the book arrive together. One release is worked through end to end in the guide to a United States CPI release.

What becomes quotable, and when 

A CFD has no price of its own, so an instrument's hours are inherited from whatever it is written on. US index CFDs generally reference index futures, which trade for nearly the whole day with a short daily break, so a US index quote exists long before New York wakes up. The cash index it is named after is a different object, calculated from the prices of its constituent shares, so it exists only while those shares are trading.

Shares CFDs and ETF CFDs written on US listings borrow an exchange price directly, so they are quotable while that exchange is open and not otherwise. The consequence is a gap. News arriving while a venue is shut moves no prices, because there are none to move: it appears in the first prints of the following cash session, which can open some distance from the previous close, with no trade having occurred in between. Currency pairs have no weekday equivalent, since the market they reference does not close between Sunday evening and Friday evening.

How liquidity behaves into the close 

London desks leave in the New York early afternoon, and the currency market spends the rest of the session with one deep pool of participants instead of two. Quoted depth in the major pairs is generally thinner across the New York afternoon than across the morning, and quoted spreads on many instruments are correspondingly wider, a spread being in part the price of the risk a market maker carries while waiting for the other side.

US shares do the opposite at the same hour. Equity volume concentrates into the closing auction, for many listings the largest single print of the day, because funds that price against the closing level have to be there for it. So one clock hour is thin in a currency pair and the busiest of the day in a share listed a few streets from the desks that have just gone home. Liquidity is a property of an instrument at a time, never a property of a time on its own.

The late New York afternoon also carries the daily cut off at which the value date of open positions rolls forward and financing is applied to anything held across it. Quotes on many instruments widen briefly while books are handed between regions.

Where practitioners disagree 

The first argument is whether the New York afternoon is dead time. One tradition treats the hours after London leaves as a stretch to be discounted, since the currency book is thinner and the day's scheduled news is out. Another points at the closing auction, at the policy statements landing squarely in those hours, and at US shares being at their most active precisely then. Both are accurate about different instruments, which is why the argument recurs rather than resolving: the claim that an hour is quiet only means something once the instrument is named.

The second argument is whose clock the market runs on. Much charting software, and most economic calendars, default to a New York clock and close the daily candle at a New York hour. That is a vendor convention rather than a property of the market: a daily bar in a market that never closes has to be cut somewhere, providers cut it at different hours, and two charts of the same currency pair can show different daily candles without either being wrong.

New York is one session of three, not the reference the other two are measured against. It opens last, it carries the densest scheduled calendar, and it holds the only hours in which US listings can be quoted. None of that makes it the centre of the day. From the Gulf it is the part of the day that happens in the evening.