- 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 | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
 | 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 | $200 | Open Demo | Trade Live | ||
 | Australia (ASIC), Europe (CySec) | EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.2 pips | Up to 500:1 for all traders | 24h | Yes | Yes | MT4 | $200 | Live Account | Demo Account | ||
 | Australia (ASIC), Europe (CySec) | EURUSD 0.0 pips, GBPUSD 0.1 pips, EURGBP 0.2 pips | Up to 500:1 for all traders | 8h | Yes | Yes | IRESS, MT4, MT5 | $100 | Live Account | Trade Live | ||
 | 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 | $100 | Open Demo | Trade Live | ||
