- Massive movements in NY market saw EUR/JPY fall almost 10 big figures
- Credit lines are again becoming a problem for market participants
- Liquidity was at times almost non-existent
- Huge falls on Wall Street blamed on electronic trading
- Reports that the Nasdaq were to cancel some trades encouraged a recovery in the JPY crosses
- The BoJ injected liquidity further weakening the JPY
- The UK election guaranteed significant volatility in the pound, with a hung parliament still the most likely outcome
- This could have an adverse reaction on UK gilts
- MoF: coordinated intervention unlikely
- China govt think-tank: should widen Yuan band
- Regional stockmarkets were down by as much as 4% earlier in the day but have recovered somewhat
As Jamie mentioned in his wrap, it was one of the most volatile markets he has experienced in 25 years and the Asian market obviously opened with tremendous trepidation.
EUR/GBP was the first main mover as the exit polls suggested a hung parliament. It rallied from .8500 to .8585 in the space of 20 minutes. A statement from the Tories that they felt they could govern based on the exit polls caused an immediate reversal and EUR/GBP fell 140 pips to a session low at .8443. As the results started to flow through, it became clearer that a hung parliament was very likely, the reaction of the gilt market started to worry traders and EUR/GBP reclaimed almost all of this 140 pip fall before settling down around .8550 for the last hour of trade. That was a 400 pip move in the cross during the Asian session inside a .8443/.8588 range. Amazing.
Cable traded up and down inside a 1.4725/1.4935 session range mainly driven by EUR/GBP and GBP/JPY flows although there was also some GBP/AUD buying noted.
The EUR/USD was relatively quiet, if that is possible inside a 1.2587/1.2735 range. EUR/JPY and EUR/GBP flows were the main catalysts behind any moves as the market forgot about Greece for a few hours and worried about survival.
USD/JPY closed in NY at .9080 after seeing a low of 88.00 in capitulation trade during their session. The early move was lower in Asia with the pair falling to 90.00 and straight back to 90.80 in a 15 minute period. The statements regarding the electronic trades helped underpin the JPY crosses and USD/JPY banged against the 91.30/50 breakdown level on a number of occasions before finally breaking through. BoJ actions certainly helped. Range: 90.03/92.79
EUR/JPY had a tidy 400 pip range: 113.68/117.89
The AUD has also been relatively subdued but has benefitted from the recovery in the JPY crosses. Range: .8822/.8931.
Markets: Nikkei -2.8%, Kospi -2%, HK and Sydney -0.75%. Gold $1200/oz.
