Three major trading periods define the daily FX market, namely the Tokyo Trading Session, the London Trading Session, and the New York Trading Session.
Generally, the FX market is most active when sessions overlap with a US/Europe overlap between 8 AM - 12 PM (New York Time) and a Europe/Asia overlap between 2 AM - 5 AM (New York Time).
Tokyo Trading Session: 7:00 PM - 4:00 AM (New York Time)
Tokyo is the first market to open and many large participants use the trade momentum there to develop their strategies and as a gauge for future market dynamics. Approximately 6% of the world's FX transactions are enacted in the Tokyo Trading Session.
London Trading Session: 3:00 AM - 12:00 PM (New York Time)
London is the largest and most important trading center in the world, with about a 34% market share of the daily FX volume. Most of the world's largest banks keep their dealing desks in London because of that market share. The large number of participants in the London FX market and the high value of the transactions makes the London session more volatile than the other two sessions.
New York Trading Session: 8:00 am - 5:00 pm (New York Time)
The second largest trading market, New York handles approximately 16% of the world's FX transactions. The majority of the transactions in New York occurs during the US/Europe overlap; with transactions slowing as liquidity dries up and European traders exit the market.
Since California has never really served as a bridge between the US and Asia, there is a 50% drop in activity by midday. As a result, market developments in the afternoon during the New York session do not garner as much attention.