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28 Oct 2016 (AFR) – Curse of the witching hour haunts currency traders

[COMMENT: This is a very interesting article about the impact on currency trading of the different time zones around the world, and the things that happen when it’s night time around the world and some traders are sleeping.]

(28 October 2016, AFR, p28, by Netty Ismail, Bloomberg)

‘In the global currency market, the darkest hour comes just as dawn is breaking in Asia and traders in Sydney are sipping their first flat white. Between the New York close and the start of trading in Tokyo, foreign-exchange volumes dwindle to just 2 per cent of peak turnover, according to Aite Group, a consultant in Boston. As a result, any transaction in that two-hour window will hit the market disproportionately hard.’

‘The plunge in Britain’s pound earlier this month shows what’s at stake. About 7am Singapore time (9am AEST) – while London dealers were sleeping and those in New York were finishing up their day – sterling slumped more than 6 per cent in just two minutes, reaching a 31-year low. After that, traders are more wary of leaving automatic sell orders known as…’

Read the full story at AFR.com (might need AFR login access, or try: AFR.com/trial)

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