This morning just before 8:00 a.m. the euro was trading at 126.30 and over the next hour traded up 184 pips to 128.14, a startling move, especially given the lack of earth shattering economic releases and natural disasters.
“Given that this market trades $29 million per second, $2.5 trillion per day, I can’t imagine what kind of an order it would take to move the euro 150 pips,” says Ken Lazzara, chief dealer at EasyForex.
Lazzara says that while this is the most active part of the currency trading day, it would take an enormous amount of business to move the market that much, that quickly. “$25 billion might not even be enough to takeout all those offers and rally that much. The interesting thing is, let’s say the top was 128.10, within the next hour it traded back down to 125.60.”
During that same period, gold moved to $764.80 from $734.50. “In the commodities, something like that happens and immediately you think it some kind of natural disaster or someone shot off a missile. When gold moves like that, it means there was a big piece of bad news somewhere,” Lazzara says.
Andrew Wilkinson of Interactive Brokers immediately dismissed the CPI numbers release given the timing and the fact that everyone expected the numbers to be weak. He postulates that it was a rumor that the Chinese government would begin shifting its reserves from U.S. dollars into gold. “This clearly took a grip and triggered rumored stops in the euro above $1.27. Gold also rallied apparently, but both gold and euro have subsequently faded. I did also see the British pound sharply higher and just assumed it was impact of minutes from the BoE [Bank of England].”
Any thoughts? E-mail me at cmcmahon@futuresmag.com
