At the beginning of the Asian trading on Monday (February 11), the liquidity caused by the Japanese market was thin, and the Swiss franc exchange rate staged a "flash crash" scene. This is also reminiscent of a currency flashover that occurred at the beginning of last month.
According to Bloomberg, the Swiss franc fell from 1.0004 against the US dollar at around 6 am on Monday, Beijing time. In a few minutes, it fell to a low of 1.0096 since November last year, a drop of 0.9%. Then it suddenly reversed and rose 0.2%. .
(USD/CHF trend source: Bloomberg, FX168 Financial Network)
The "wild" trend caused the Swiss franc to fluctuate by nearly 110 points against the US dollar, about twice the average daily volatility of 56 points.
In terms of crossovers, the Swiss franc once fell 0.4% against the yen. The euro/Swiss franc also experienced big ups and downs, and there were more than 100 points in the short-term.
(Source: Zerohedge, FX168 Financial Network)
Some traders believe that part of the reason for this situation is that Japan is closed. As the Japanese financial market was closed for the holidays on Monday, the lower than usual trading volume triggered a series of wild exchange rate fluctuations.
According to Bloomberg's analysis of traders, the reason for the “flash crash” of the Swiss franc was that traders used the lack of liquidity in the morning market and sold the Swiss franc against the US dollar, euro and yen positions and triggered a series of Stop loss disk.
During the Asian trading hours on January 3, there was also a “flash crash” scene in the foreign exchange market.
On the morning of the day, the USD/JPY plunged more than 400 points in short-term, and the AUD/JPY collapsed nearly 8%, which coincided with the end of the week-long New Year holiday in the Japanese market.
(January 3, Asian market, the beginning of the US dollar / yen trend picture source: Zerohorge, FX168 financial network)
Australian nationalbank(NAB) Senior Forex strategist Rodrigo Catril in Sydney said: "Lack of liquidity is a common factor in these events. Traders and strategists are now printing Japanese holiday calendars in large prints on their desks!"
(Article source: FX168)