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Public holidays and Forex

Every professional trader closely tracks the public holiday calendars in different countries as public holidays are one of the various factors affecting the international currency market. Trading activity changes sharply during holidays and it is difficult to foretell where the market will go even with fundamental analysis, MetaTrader 4 advisors, and technical indicators. The influence of public holidays is rather obvious. Key players do not enter the financial market; central and large commercial banks are closed. This reduces market liquidity. A holiday has the strongest impact during the trading session of the region, where this holiday is celebrated . For example, if a European country celebrates some public holiday, the North American and Asian trades are conducted in a usual way or close to it, while the European markets will be closed for trading. In the same way, the Tokyo Stock Exchange closes due to some national holiday in Japan reducing trading volatility. However, not all holidays are significant enough to make a working day a holiday in several countries at once. The business world does not come to a standstill completely even on Labor Day, International Women's Day, New Year, or Christmas. Of course, financial flows are weaker and there are fewer pieces of important news, but traders who rely on fundamental analysis can make good profits with expert advisors even during this period.

Christmas is the most significant holiday of the Catholic world and many dealing centers halt trading on all instruments on December 25. However, volatility for some instruments such as USD, AUD, and NZD start declining on the Christmas Eve and returns to usual levels only after New Year celebration.

Besides, December 24 is a national holiday in the North European countries (Norway, Denmark, and Sweden), so you should close corresponding short-term deals on December 23. While the Catholics celebrate, the Asians keep working so traders can conduct deals on some Asian instruments (SGD/JPY, for example), but pairs like USD/JPY and EUR/JPY are subject to the limitations mentioned above.

The situation changes after January 1 as the Japanese banks are closed for the holidays by January 3 and yen traders can take a break. Often public holidays are followed by a series of important political or economic news that can affect deals: large companies declare bankruptcy or expansion, new appointments or resignations take place in various governments, crisis arises in some country etc. Each piece of news has its certain impact on the currency market and exchange rates. When producing a forecast or developing a strategy, every trader should pay a close attention to public holidays, though market participants should not hone in on public dates insignificant for Forex. The holidays that hardly affect trading include Columbus Day, different bank holidays, Memorial Day, and some others. Still, these holidays are important in terms of trading commodity futures, shares, bonds, and assets on stock exchanges, but for the forex market they do not play an important role.

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