We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

Free Trading Guides
EUR/USD
Bearish
GBP/USD
Mixed
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Oil - US Crude
Bearish
Bitcoin
Bearish
More View more
Real Time News
  • Trading Global Markets new #podcast features @DailyFX Anlayst @PeterHanksFX , who discusses what assets would benefit in the next #recession. Tune into this new podcast episode hosted by @MartinSEssex here: https://t.co/Twr44cZ1GB https://t.co/llKzvZGDpQ
  • The #Euro remains weak against a range of currencies and any move higher is struggling to gain traction as the single currency continues to be sold-off. Get your #EUR technical analysis from @nickcawley1 here: https://t.co/9B2m0kmd4d https://t.co/ZENxpC59mP
  • The Indian Rupee 2020 outlook is bearish as India faces stagflation risk amid rising onion and crude oil prices. $USDINR may rise in the medium-term as the RBI defers hiking rates. Get your market update from @ddubrovskyFX here: https://t.co/lRrlZjAQDw https://t.co/mFv1EOYMjG
  • The $GBP may be on the cusp resuming a 12-year downtrend against the US Dollar as signs of topping emerge at pivotal chart resistance. Get oyur market update from @IlyaSpivak here:https://t.co/9rM3OjWmBA https://t.co/sUWcSFruHw
  • The $NZD may be on average at risk to further losses against its major counterparts such as the US Dollar and Japanese Yen. Where to for NZD/USD and NZD/JPY from here? Find out from @ddubrovskyFX here:https://t.co/OFjePKYdCb https://t.co/eo1c6QAVd8
  • $AUDJPY technical positioning hints prices may be on cusp of turning lower after a late-2019 bounce, recoupling with a dovish RBA policy outlook. Get your market update from @IlyaSpivak here: https://t.co/z84Y0V0ZtH https://t.co/wcIGO1emDw
  • The Japanese Yen has faded into 2020 as market risk appetite has held up and hit demand for haven assets. $USDJPY now challenges a key medium-term downtrend, but hasn’t topped it yet.Get your market update from @DavidCottleFX here:https://t.co/4X6vgCgkB7 https://t.co/FfCkGhtHsm
  • The $USD may fall against the Swedish Krona and Norwegian Krone if commentary from officials at the Davos forum uplift market mood and pressure haven-linked currencies. Get your market update from @ZabelinDimitri here:https://t.co/SZAG0yMu3d https://t.co/cBZj5tC0Ny
  • The $NZD is inching toward support guiding gains in the fourth quarter of 2019. A break may set the stage for long-term bearish trend resumption. Get your market update from @IlyaSpivak here:https://t.co/bnlx4RJ8oV https://t.co/d60YziMYnO
  • $Gld prices are poised to mark the highest weekly-close in nearly seven-years, but the bulls aren’t in the clear yet. Here are the XAU/USD levels that matter next week. Get your $XAUUSD technical analysis from @MBForex here: https://t.co/yeTH6HwncQ https://t.co/6sIpxTSNaX
Japanese Yen Breaks to Record in Least Liquid Hour of Trading Day

Japanese Yen Breaks to Record in Least Liquid Hour of Trading Day

2011-03-16 23:31:00
David Rodriguez, Head of Product
Share:

The Japanese Yen broke to fresh record-highs against the US Dollar in the least-liquid hour of the trading day, exacerbating bid/ask spreads and making it exceedingly difficult to enter/exit trades.

The Japanese Yen thundered through fresh post-World War II peaks in a matter of minutes, confounding analysts and leaving traders shocked at the severity of the moves. Yet there was little apparent rationale behind the sudden 300-pip decline in the US Dollar/Japanese Yen pair. In fact newswires were flashing headlines that the Yen was hitting fresh highs—not the “why” or “how” behind the USDJPY tumbles.

Bloomberg Japanese Yen Newswire Virtually Blank as Currency Hits Record Highs

Japanese_yen_spreads_wide_as_hits_record_body_Picture_3.png, Japanese Yen Breaks to Record in Least Liquid Hour of Trading Day

Source: Bloomberg Professional Service

The moves occurred quite soon after the New York trading session close and during the least liquid hour of the trading day. Said fact helps explain how the heavily-traded USDJPY was able to move so far so quickly.

Japanese_yen_spreads_wide_as_hits_record_body_Picture_4.png, Japanese Yen Breaks to Record in Least Liquid Hour of Trading Day

Source: FXCM Execution Desk Data, 2010-Present

The sharp volatility likely only fed into itself, as very few market makers were willing to provide Bid prices amidst such dramatic declines. The net effect was to exacerbate already-wide spreads and provide for very poor execution/liquidity across JPY pairs. Interbank price feeds show price aggregators showed ‘grayed out’ prices through the stretch, signaling that there was in fact no hard Bid/Ask provided in said currency pair through that trade.

Trade Recap on Bloomberg Interbank Aggregation Shows Spreads as wide as 32 Pips

Japanese_yen_spreads_wide_as_hits_record_body_Picture_5.png, Japanese Yen Breaks to Record in Least Liquid Hour of Trading Day

Source: Bloomberg BGN

A number of reported trades occurred at spreads in the period shown in the table above occurred at Bid/Ask spreads as wide as an almost-incredible 32 pips. If we consider the fact that many of these transactions did not have a firm Bid price attached, the real spread could have been far wider.

DailyFX Volatility Indices Surge as Markets Extremely Volatile

Japanese_yen_spreads_wide_as_hits_record_body_Picture_6.png, Japanese Yen Breaks to Record in Least Liquid Hour of Trading Day

It is obviously impossible to predict when/if such events will happen, and there really is little way to defend against such dramatic moves. Our DailyFX Volatility Indices have surged amidst recent price action as volatility expectations show markets expect further large moves. Such shifts emphasize that traders should likely keep exposure and leverage well under control amidst incredible uncertainty surrounding the Japanese Yen and broader financial markets. We will likely need to wait for more normal market conditions to advocate trading with normal position size through the foreseeable future.

Written by David Rodriguez, Quantitative Strategist for DailyFX.com

To contact the author of this report, e-mail drodriguez@dailyfx.com

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.