MUMBAI: It took seven minutes for yen to surge through levels that have held through almost a decade.In those wild minutes from about 9:30 a.m.
Sydney, yen jumped almost 8 per cent against Australian dollar to its strongest since 2009, and surged 10 per cent versus Turkish lira.
The Japanese currency rose at least 1 per cent versus all its Groupof-10 peers, bursting through 72 per Aussie level that has held through a trade war, a stock rout, Italys budget dispute and Federal Reserve rate hikes.Traders across Asia and Europe are still seeking to piece together what happened in those minutes when orders flooded in to sell Australias dollar and Turkeys lira against yen.
While some pointed to risk aversion triggered by Apple Inc.
cutting its sales outlook, others said Japanese retail investors were bailing out of loss-making positions.
Whatever cause, moves were exacerbated by algorithmic programs and thin liquidity with Japan on holiday.The moves were very violent, said Stephen Miller, an adviser at Grant Samuel Funds Management Pty in Sydney and former head of fixed income at BlackRock Investment Management (Australia).
It would have caught some by big surprise.With Japan on a four-day holiday this week, traders said they struggled to handle a flood of sell orders with pricing erratic.
Once yen strengthened past 105.50 against dollar, others were forced to cover their short yen positions, said traders who asked not to be identified as they arent permitted to speak publicly.It looks more like a liquidity event with move happening in gap between New York handover to Asia, said Damien Loh, chief investment officer of hedge fund Ensemble Capital Pte., in Singapore.
It was exacerbated by a Japan holiday and retail stops getting filled on way down especially in yen crosses.As a result, yen surged against every currency tracked by Bloomberg, and was up 1 per cent against dollar at 107.78 by 9:30 a.m.
in London.The haven asset has strengthened against all its major counterparts over past 12 months as concerns over global economic growth mounted and stocks tumbled.
It rose 2.7 per cent against dollar last year, only G-10 currency to gain versus greenback.