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DXZ Flash Crash Detonates Entire Currency Complex
And now, for that Friday night bomb, when nuking stocks has a tad too much of a Waddell and Reed 'amateur hour' aftertaste, the only alternative - destroy the entire currency market. If this crash in the DXY (seen below) had happened during regular hours, apparently driven not by the dollar but by DXY component EUR (there was no comparable move in other USD pairs), it would have created a complete market collapse. Luckily it happened an hour after close. Weekend collapse averted. And a quick glance at the other pairs shows that the GBP and CHF were solidly impacted as well.
EURUSD:
EURCHF:
And apparently the crash metastasized to the GBP as well.
At this point, who really cares anymore?
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Print more FRN's think of all the carbon credits you'll save
LOL, SWR.
How's that blackberry stock tasting?
One thing we can agree on there, JD.
I've never touched MJ myself, but I sure do like the feel of hemp fabric. The seeds are full of oil which has numerous uses, and it grows like a weed.
hemp milk Crushes rice milk and almond milk nutrient wise, another natural source of omegas too.
Been there and done that. Not sure if ZH has done a full on article on Hemp and its history. Worth looking up.
George Washington was a hemp farmer.
my father mentioned that as well to me. he was interested in growing tobacco and thought it curious his interest in MJ. i really like it now a days. i use to not be able to handle it mentally, getting high but can now.
Yep, and Benny Hemp was a Brit Comedian.
really wtf?
what kind of world is this?
always with the AH? good greif.
FUCK evey night night with the futures
Friday night all the time with this BS.
Wait, Wait Wait, rolling joint now....
nice weed.
lighting match.... NIIICCCEE
wait drinking kool aid
nice
IRT in india wtf...
later.
\
Now you see, BouttaC, there's something on which we can agree (unless we fight about indica vs sativa).
Thees wons fuh ze Guhvahnaytuh. <spark>
http://www.youtube.com/watch?v=BH4CjuBOaWY
It looks like I picked the wrong week to quit sniffing glue:
http://www.youtube.com/watch?v=GeI5ke0BENw
Mr Toad's Wild Ride in afterhours. Sneeze and it's over, move along.
hmmm... after hours on a friday. should be a low volume period under normal circumstances. this "flash crash" speaks to a momentary lapse in liquidity, does it not? what is the big deal? some one has a market order out on some low valuation when bids dry up during a low volume period. the idiot with the market sell order deserves to lose his ass.
i'm failing to see doom here. what am i'm not seeing (other than doom)?
The FX market is a much larger than the stock market. Such large-scale flash crash is quite conspicuous. Never saw such flash crash on the FX market before.
There were similar odd spikes in /DX last fall (from mid 70s up to 82-83 lol), but shorter duration and the trades always got busted.
I watch the DX tick every day and there are always trades that flash buy/sell or vice versa whichever way they want the trade to go. These moves also jack the DX up or down slightly.
Except this isn't the interbank FX market but a much smaller and less liquid ICE contract.
John Mynard Keynes channelled me: "It's all about the CON-fidence".
Stuxnet Dry Run 0x7: 0x1
Quick off-topic question:
Does Karl Denninger wear a toupee? Did Wikileaks give us anything on this?
Wild movie plot idea;
What if all the recent "flash Crash"'s were like different variations of a single process that was just testing certain sub-algorithms . After each component is tested(ie different markets, different algorithms) an orchestrated concert effect against all markets?
this is a test
of the emergency dollar collaspe system..
this has only been a test ...
in the event of a real dollar collaspe
please put head between legs
and kiss your goldless ass goodbye...
long silver..
Silver was almost down 10% this week. Almost scared me to incontinence...:(
settle down e..you drink single malt whiskey? try it..that with a seperate glass of water..it'll do wonders..dont be the weak hand on ag
I bought some platinum with my a bit of my silver this week. Look at poor ol' platinum... hasn't even broken out of Feb's low. I call it doing "God's Work".
Platinum, platinum, my lovely platinum.
Keep working!
"..when nuking stocks has a tad too much of a Waddell and Reed 'amateur hour' aftertaste.."
Thwack!
http://www.youtube.com/watch?v=xxdE1zEhQTQ
How many trades were canceled by the SEC?! None I suspect.
That's because the 4X market is under the scrutiny of the CFTC, not the SEC. Still, the answer is none because the market was inactive. No one anywhere were taking any trades at all.
Bad tick.
A trade is a trade with a buyer and seller.
This sort of shit can only create fear and uncertainty in the system and the dollar. Of course you would want to add to gold while your dollars can still afford it. Don't think you would want to be out there trying to catch falling knives.
Maybe that Israeli virus that is affecting Iran's nuclear plant got in to skynet.
This is just the static before your screen turns to snow.
Flash crash in FX. What could go wrong with that? </sarc>
Three Cents in the DXY is NOT just .003 in EURUSD
Tyler, what am I missing? No access to charts at moment. Is it Gold related?
The dip only seems to be in the Dec contract, because otherwise that would have sent eur/usd through the roof(not the other way), so its looking like a fat finger job in futures. I would put the other moves down to the usual interbank shenanigans... huge move all the same.
P.s. i have no idea about the relationship between interbank rates and futures after hours btw.
Yeah, something's inaccurate because the euro move in the chart above is the smallest by percentage, not the largest, and does not account for the dollar chart.
Anybody know how many /dx contracts were actually traded in that event?
Within the USD Dec contract
76 contracts 3 minutes after the close followed by 332 one minute later made up the entire downleg.......the 332 contracts was slightly larger than the biggest one minute block all day
That's not even $1M in margin.
Puts HFT to shame.
Up to 1,000,000 rounds per minute
http://www.youtube.com/watch?v=xe-QP8s1ZJc
BURN BABY BURN!
When things like this happen it is not the time to try and make money, it is time to try and save your arse. Like walkning down stairs in the dark, you never know which is the last step.
Got oil, got ag, got USD.......got the USN........lol.
Got gold?
I'll take gold over anyone's kilobytes on another computer somewhere.
algos... are in everything. and my trades are canceled- lame
Wouldn't this have caused a flash SMASH (pumped higher) for stocks/gold/etc.? Besides, when the dollar is down, stocks are up. Isn't that the real correlation? So a 74 handle on the DXY would have put us back at 1225 on the S&P easily...
yes that's what I'm asking below...........a crash like this seems bullish
I don't see a crash in the dollar as bullish for stocks. If the system isn't stable, the country is in chaos. What Ben wants is an orderly and manageable decline, not so obvious that people are pissing their pants and getting angry that their currency is looking like toilet paper.
He should have thought of that before we left. That is like pulling out of the driveway and getting to the end of the block and one of the kids whining that they need to pee.
The momo machines would bid up stocks regardless. Then maybe a few hours/days later we'd all come to our senses and say that the currency is collapsing. But during the trading day, I say we would have seen a 1,000 point jump in the Dow.
Then that'd cause all the 401k money to come back into the equity markets and chase this thing to 40,000.
An observation for all the gold and lead fans. I was plowing through some ten year returns and while not completely pinned down yet, I found that lead has outperformed gold. Not that they are the same in any way, but to the point: had you decided to take dollars and buy lead instead of gold 10 years ago and today sold your lead for dollars and bought gold you would be ahead. Alchemy is alive and well in the 21st century.
-profd
I don't know the first thing about currencies but what I can see is the December USD futures contract dramatically fall to December '09 lows and rebound, flash crash.
http://finviz.com/futures_charts.ashx?t=DX&p=m5
The forex charts that tyler has posted EUR/CHF and EUR/USD don't seem to be that big of a deal as they're well contained within the intraday time frame trades.
Further, referring to the underlying quote, what market is this going to crash? The USD December contract plunges isn't this bullish for stocks? What effect would a blunder like this have on the S&P, DOW, Nasdaq if it happened intraday. Can anyone come up with any idea why this happened? I mean this is happening right before the G20.........if intentional, is this a statement from America or from another country and how big of a statement is it?
"If this crash in the DXY (seen below) had happened during regular hours, apparently driven not by the dollar but by DXY component EUR (there was no comparable move in other USD pairs), it would have created a complete market collapse. Luckily it happened an hour after close"
The Z(dec) dxy contract at the ICE isn't a major hub of liquidity compared to the Interbank market so it wouldn't take too much of an algo-spazzing out to blow through any resting bids. But with all the cross linked computers working the graveyard shift, who knows what the response would be from the purchaser of these Dollar contracts.
A human would have said "holy shit the world is ending"
An algo would try to unwind it in another market. This market is fragmented, but currencies in the major crosses won't move like that unless real size is coming in. The dollar contract at the ICE on friday at midnight eastern is thin.
My guess is someones algo spazzed out, causing other momentum algo's to spazz, and then the rodeo masters hit the EJECT button.
Just like Israel doesn't freak out when car bombs go off every day, I am now used to algo's fucking up the markets.
The only way to teach them is to STOP DECAYING THE FUCKING TRADES!!!!!!!!!!!!!!!!!!
Exactly.
I take it from your post that this is not an event that would have likely happened during trading hours.
I'm still scratching my head over this whole "markets would crash" comment from Tyler. Seems the market would have surged with a weaker December futures contract intraday.
IMO, no. This was just someone being a jackass in a thin market.
Whatever or whoever it was be it Brazil (that isn't showing up at the G20 and buys dollars) or a ghost in the machine it did more dollar destruction in less than 2 minutes then the forces that be did all September.
No, Tyler is correct.
In (ab)normally flowing 4X markets (like we have today), the USD is seen as a "risk" asset, particularly against the Japanese yen and the Swiss Franc. (The Franc turns at the end of next week, by the way...). The only reason the USD is seen as a risk asset is because, ironically, traders have confidence in the US Treasury and Fed; to print money, to monetise debt and to cannibalise their own children in order to maintain the current paradigm a bit longer.
Now, enter a flash-crash on the EURUSD (which means that the dollar is going up, by the way...). Enter instability. Enter "risk-off," in a sudden and undignified manner. Suddenly, the re-polarisation of the USD to the global safe-haven currency!
Everyone, everywhere sells all assets denominated in dollars just so that they can get their hands on greenbacks. The same scenario played out during the early part of this current downturn whereby Europeans and Brits hoarded dollars, sold off oil and held dollar-credits tightly with both fists. Unca Ben even had to come in and affect 4X swaps to the tune of a half-trillion dollars just to pry them loose.
_________
As to such large moves occurring during regular trading hours; it happens all the time but not in a matter of a few seconds. Generally, large moves occur over a span of fifteen to twenty minutes.
There is going to be a test coming up in a matter of days when the Fed announces QE2- or doesn't! Either way, the market will move about the same distance as this 20-second 200-pip drop and reversal but it will be a sustained move, driven by money entering and exiting the market. It will take about twenty to thirty minutes for the market to settle to the news and some bars will actually be longer than the supposed crash of the Euro- after hours, with a trade launched from the futures market, no less.
In other words, this move could not have taken place during regular trading hours unless it was caused by the same silly thing we saw late Friday. But to visualise that trade reminds me of a video I saw once...
Seems a crane landed in an Amazon stream. School of pirhanas nearby. The fish kinda look around, eyeball each other and mentally draw straws.
The crane is swallowing a large minnow.
The one pirhana says he's going in and he takes off in a jet. He nips the crane on the ankle, like a sharp scratch. The smell of blood in the water.
The foam, the feathers, for whatever macabre reason, it was fascinating to see. Those pirhanas took that giant bird down in about fifteen seconds- I mean compleat- and that ain't no lie. Unbelievable.
So to say, those lonley, lost Euros would have found a home pretty quickly.
:D
correction: 6 pm eastern...
Diverted pipeline almost operational.. new naval base in place and inaugurated....war plans complete.. bomb away...
http://bostonwealth.blogspot.com/2010/10/war-plans-now-complete-bomb-awa...
HFT
take you higher...
http://www.youtube.com/watch?v=ZYrz5y1mW5U
Found this, seems we've hat 9% flashes on the dollar in premarket in the past as reported by zerohedge in November '09 well before the stock market flash crash.
Today's was a mere 4%
http://www.zerohedge.com/search/node/ice%20cancels%20dxy%20trades
Within two weeks after that flash, the USD index bottomed and started its journey upward till June 2010. And after the May 6 flash crash, the stock market went down till July 2010. So can we think the flash crash in DXY today as a token of the future direction of the dollar?
Well, that Nov dollar flash was a melt up that led to a higher dollar in the future
The stock market flash crash was a melt down that led to a lower market.
But, on those two ocassions
1. The dollar had been selling off into the melt up crash
and
2. The market had been rising up into the melt down crash
Now we're seeing a flash melt down in the dollar after the dollar has been trending down. A different twist on things but we might note that the flash crashes occur at turning points rather than inferring the move will continue in the same direction as the crash.
The stock market already topped at the end of April and the May flash crash was just an reinforcement of the downward movement IMHO. So you can hardly view flashes as turning points.
Since the stock market these days has nothing to do with the fundamentals, I don't think the lack of fiscal stimulus will be problem.
I do hope you guys aren't trying to trade off this "information."
Flash crash drove retail out of the market. No-one but Fed lackeys and frontrunners want stocks anymore. What happens when you have a dollar flash crash?
Good time to start investing in firearms and ammunition futures.
Good time to start investing in firearms and ammunition futures.
Disturbing to say the least...
A crash is when a stock of currency goes down 20%.
It didn't "crash" 20% so this topic is a bit overblown.
This is just silly...
Primary markets in FX are EBS (EUR/USD/CHF) and Reuters(just about everything else), volumes there exceed DXY by orders of magnitude.
These markets close at 10pm London time on Friday, and in few minutes prior to that there is hardly any trading, people withdraw their quotes for weekend, and spreads can easily reach several percent. The mid can easily be 50 bips away from normal, but this hardly matters if the spread is 1%.There was absolutely nothing unusaul about this Friday close compared to any Friday in the last 10 years.
Ever heard of a bad print?
Sure. The real question is have you ever heard of the QR function in bloomberg which shows hundreds of actual trades having been completed.
How is it possible, after hours? I mean, that's not "fair."
Perhaps it was pre-arranged, basically statistical swap between exchanges or something. I am curious to know if it were traded on a 50:1 margin, like everyone else...
?:
Perhaps the "Fat Finger" was the middle one raised by China and the BRICs in general as an expression to Timmay and Ben that "enough is enough" with your currency manipulation (the result of incessant mention of QE2). The export of inflation is resulting in asset bubbles in emerging markets (as well as a slow but effective default on US government debt), and has reached intolerable levels. "So you want to manipulate your currency?" ask the BRICs; "Let us show you how it's done."
So the next day, in its headline about the G20, Reuters reports that there was agreement on the IMF:
"That deal will make China the third most powerful member of the IMF, up from six as it overtakes traditional powerhouses Germany, France and Britain. India moves to eighth place from 11th."
http://www.reuters.com/article/idUSTRE69K0Q720101023
America has run into a BRIC wall and it's not about money; it's about power.
"America has run into a BRIC wall "
Classic!
ORI
The IMF will move to an all-elected executive board of directors and Europe will give up two seats. Earlier today, a G- 20 official said that the Group of Seven, Brazil, Russia, India and China settled on the plan after a disagreement between the U.S. and Europe over how to increase the role of emerging-market countries on the fund’s board.
http://www.bloomberg.com/news/2010-10-23/strauss-kahn-says-officials-at-...
The gold sitting in my floor safe didn't budge an ounce.
DXY is showing the strongest weekly chart set up in years - it will be flying soon!
http://themacronavigator.blogspot.com
Most of the turnaround and gains will come from the USDCHF pair. It has already ramped but, if my calculations are correct, when this baby hits eighty-eight miles an hour, you're gonna see some serious shit.
The EURCHF pair is also due but after a retracement week upcoming. After that, it's off to the races. Stick a robot on it.
:D
Agree, USDCHF daily and weekly chart is bullish.
However market intervention and reduced levels of consensus by market participants can cause trend direction anomalies and caution is warranted.
http://stockmarket618.wordpress.com
Yes, i'm expecting further USD strength when equities resume their downtrend.
http://stockmarket618.wordpress.com
This post is like a poetry jam:
Kind of hard to take seriously a story that has /DXZ and EUR/USD crashing at the same time.
I don't see *anything at all* on FX *anywhere*.
????????????????????????????????????????
It makes no sense that DX and EC move the same simultaneously unless someone is gaming to fleece the flock. We saw this happen to the DX upside in Fall 2009
I don't know how to submit tips to Tyler, but I made a startling discovery this weekend. I cropped and pasted the rallies from March to mid-April (the second leg up on the rally) to the most recent rally from Sept to mid-Oct. What I discovered were two charts that were almost visually identical, and also the same height.
My question for Tyler and his experts is: What are the odds of this happening in nature?
http://dejavutrading.blogspot.com/2010/10/you-might-find-this-interestin...
My website looks at historical comparisons to look for trading edges: http://dejavutrading.blogspot.com/
Thanks for the observation. I think TPTB are pretty consistent with the Big Con
From the horses mouth, so to speak.
I can confirm that the low for Friday (10/22) was 75.850 in Dec10 USDX.
All trades, 75.800 and below were cancelled by the exchange.
I never read whole articles but the way you wrote this information is simply amazing and this kept my interest in reading and I enjoyed it. I read your post and I found it amazing. Your thought process is wonderful.
Regards,
moulin farine