ForexLive Asia FX news wrap: Huge yen cross moves

Forex news for Asia trading Thursday 3 January 2019

The early Asian timezone did one of its occasional 'flash crash' moves today. Yen crosses collapsed, multiple big figure down moves across multiple pairs.

For those who have been around a while, you'll be aware that the hours after the New York market closes and Tokyo opens is the lowest liquidity time of the 24-hour forex cycle. Indeed, you have probably gotten quite sick of me pointing that out every few days each and every week.

Well, today those particular chickens came home to roost big time. And, it was even worse than normal because there was no Tokyo open, Japan was out on a holiday again today so it was the New Zealand and Australian markets flying solo until Singapore and Hong Kong came in (well after the moves).

The background to the moves has been in place for weeks, even months:

Fed rate hikes
Fed balance sheet unwinding
Trade wars
Global growth slowing in response
Oil persistently lower ... (oil traders are not dummies, they know a slowdown when they see one)
(and whatever else I have missed)

Yesterday we got another slowing PMI from China indicating once again that all was not well (this followed the slowing PMI from China on Monday).

In late NY time we got a catalyst, AAPL slashed its revenue guidance for Q1, citing:

we did not foresee the magnitude of the economic deceleration, particularly in Greater China

The first yen cross to begin to move down in an accelerating fashion was TRY/JPY, but the selling soon spread rapidly. I posted this chart earlier of TRY/JPY and AUD/JPY to give you an idea of the 'contagion' and how quick it was (click on the pic to make it larger and use a 'cross hair' app if you have one to match up times):

Stop loss sellers hit yen crosses hard. In the thin liquidity environment moves were accelerated and exacerbated. This is the wrap of the session, not an 'education' post, but when there is a huge imbalance in orders (massive stop loss sell orders) those bids that are around are not enough to halt the drop, and indeed some of the bidders may very well pull them (Would You? Of course, this ain't a charity! The rate will be better in a moment).

USD/JPY hit lows under 105. There were reports that Japanese exporters had loaded up on USD/JPY puts with knockouts at 105 ... bummer ... if so the targeting of 105 makes sense.

AUD/USD fell 0.6750, its lowest since the GFC.

Lows elsewhere, circa: