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Swiss Franc Slumps in Mini ‘Flash Crash’ as Japan Curse Strikes

  • Franc slides almost 1% in a matter of minutes before reversing
  •  Japan holidays now signposted on traders’ desks: NAB’s Catril

The Swiss franc swooned almost 1 percent at the start of Asian trade Monday as thin liquidity caused by a Japan holiday led to a mini recurrence of the “flash crash” that roiled FX markets early last month.

The Swissie slid from 1.0004 per dollar around 7 a.m. in Tokyo to as weak as 1.0096, the lowest since November, within a matter of minutes before almost as suddenly reversing the move to trade 0.2% stronger on the day. The round trip created a trading range for Monday of almost 110 pips, about double this year’s daily average of 56.

The move was a smaller cousin of the whiplash that saw the yen jump almost 8 percent against the Australian dollar early on Jan. 3, when Japanese markets were nearing the end of a week-long New Year holiday break.

“Lack of liquidity is a common factor in these events,” said Rodrigo Catril, a senior foreign-exchange strategist at National Australia Bank Ltd. in Sydney. “Traders and strategists now have Japan holiday calendars printed in a big font at their desk!”

Catril said the move may have been initially triggered by a data entry error that set off a cascade of computer trades based on pre-entered algorithms.

Read more: Beware of currency flash crashes on Japanese holidays

One client who had a short position on USD/CHF had earlier entered instructions to buy back the currency pair if it rose and the transaction was triggered at 1.0070, according to a sales trader who asked not to be identified. When the trader called the client to inform them the level had already dropped back to 1.0020.

“It’s like a mini flash crash,” said Eleanor Creagh, a strategist at Saxo Capital Markets in Sydney. “It’s a combination of low liquidity and Japan on public holiday that’s driven the move.”

 

 

Broker Regulation Spreads average Leverage Withdraw processing time Education Center Trading Signals Platform Minimum deposit Demo Account Live Account
United Kingdom (FCA), Cyprus (CySec), Belize (IFSC), Australia (ASIC) EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.2 pips Up to 888:1, and 1:30 for Non professional traders from Europe 1 - 3 business days Yes Yes MT4, MT5 $100Open DemoTrade Live
Australia (ASIC) EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.2 pips Up to 500:1 for all traders 1-2 business days Yes Yes MT4 $200Open DemoTrade Live
UK (FCA), Australia(ASIC) EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.2 pips Up to 500:1 traders outside of EU, and 30:1 for non professional traders from Europe 1-2 business days Yes Yes MT4, MT5, cTrader $100Open DemoTrade Live
Australia (ASIC) EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.2 pips Up to 500:1 for all traders 1-2 business days Yes Yes IRESS, MT4, MT5 $100Open DemoTrade Live
UK (FCA), Australia (ASIC) New Zealand (FMA), South Africa FSCA, Singapore, EURUSD 0.3 pips, GBPUSD 0.6 pips, EURGBP 1.1 pips Up to 400:1 traders outside of EU, and 30:1 for non professional traders from Europe 1-5 business days No No plus500 platform $200Open DemoTrade Live
Australia (ASIC) EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.1 pips Up to 500:1 for all traders Instant Same day Yes Yes MT4, MT5, cTrader $200Open DemoTrade Live

 



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