Dollar Flash Crashes On Last Trading Day Of 2016

Tyler Durden's picture

It is oddly appropriate that in a year everyone finally admitted markets are manipulated by central banks and broken by HFT algos, that on the last trading day of 2016, the dollar flash crashed with for no reason whatsoever.

Shortly after 6:30pm Eastern, the dollar plunged by 150 pips against the Euro, once 1.05 stops were taken out, with algos sending the EURUSD as high as 1.07 in a matter of seconds...

... while concurrently the Swiss Franc soared as much as 1.6% against the greenback, as the USDCHF tumbled from just over 1.025 to just above 1.0050 as the pair briefly flirted with parity.

What caused it? As there was no fundamental news, the answer is the same catalyst as the pound sterling flash crash: once EURUSD stops were taken out, algos all piled up on the same side of the trade and with virtually non existent market depth, it sent the world's most actively traded currency pair soaring. Indeed, as FX traders in Asia, cited by Bloomberg said, the EUR/USD jump was partly driven by a surge of algo-buy orders after pair rose above 1.0500 in early session.

Others agreed: as Shigeki Yoshitoshi, head of Japan FX and commodities sales at Australia & New Zealand Bank said, it "seems to be no particular factor driving euro sharply higher in extremely thin volume" adding that “there wasn’t any particular news. Markets are extremely thin and perhaps position tuning occurred."

So after the initial freak out where are markets now? Well, according to Bloomberg, after the Euro was dealt as high as 1.07 on the EBS platform, though that price level has been dismissed by banks and clients according to Asia-based FX traders, the pair is slowly returning to its pre-freakout level. As Bloomberg adds, the post-mortem of the EURUSD spike already has "traders swapping stories of clients dealing away and banks shedding tears" especially those who were stopped out by a few good stop-busting algos. 

And while funds were seen buying under 1.0500, when the pair hit 1.0540 one trader says he had to take the loss.

Finally, if any readers missed the move, fear not: with the world's most actively traded market having become a farcical, flash crashing joke, it is only a matter of time before the next algo-driven freak out returns.

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kliguy38's picture

I'm sure they just left their puter for a moment.....it'll be fixed in a jiff

Raffie's picture

The question is WHAT got flushed/purged?

Or did someone just make a ass load of money in a second to end 2016.

Soul Glow's picture

I am sure it wasn't China selling dollars to try and strengthen their ever deflating yuan.

aPlayer's picture

Somebody made a lot of money today in EURUSD first by going long and running all the stops awailable and then going short. Vipro Markets told it's clients in recent post that they should stop trading today unless they are willing to place tight stop losses. 

Crazy chart of EURUSD with tonights move:
https://charts.mql5.com/13/605/eurusd-m5-vipro-markets-ltd-vipro-markets...

Bryan's picture

FXCM shows it only getting to 1.0650.   Maybe the 1.07 was broker-specific, or FXCM didn't print the wacky ticks.

Arnold's picture

naw, you can't afford the speed or the forward tid bits.

Yen Cross's picture

 Look at usd/jpy. The Japs are buying $usd like 10$ parking-lot[handjob] hookers in Detroit @ 2:00 a.m.

Bryan's picture

Have you been buying gold with Yen like Kyle Bass suggested a while back?

Yen Cross's picture

  I bought a lot of gold and silver this year.  I'm down a bit on my gold but up on my silver.

   I did it more based on the euro selloff. Which, by the way, I think is long overdue for a retracement.

 The euro isn't going anywhere near parity with $usd, and the ECB will probably tighten even more next year.

   Traders jump on the bandwagon and get toasted, because thay don't understand the dynamics of F/X.

  That's why hedgers generally beat speculators.

 

HRH Feant's picture
HRH Feant (not verified) Yen Cross Dec 30, 2016 12:22 AM

I disagree. The Euro will go to parity with the USD and keep on falling. I am guessing it will settle out at about .76.

I haven't bought any silver since last Jan / Feb. Looking to add to my stack again in Jan / Feb of 2017. I expect the trend for PMs to continue downward. Great!

Yen Cross's picture

NOPE!  You have very litle understanding of finance.

 About three weeks and five days?

King Tut's picture
King Tut (not verified) Yen Cross Dec 30, 2016 2:27 AM

I don't understand how PMs can go higher in the near term if Janet is raising rates.

Max Hunter's picture

Then you should look at what happened in 1979 and 1980

HRH Feant's picture
HRH Feant (not verified) Yen Cross Dec 30, 2016 3:27 AM

I was a bad bad girl and the Tyler's hit me with the ban hammer and made me start over. I used to be HRH of Aquitaine. But you knew that already genius.

Hey, if I want to make predictions about next year why do you give a fuck?

If you knew anything about finance, the F/X markets, and PMs, you would have responded by telling me why my argument for lower PM prices in Jan and Feb, along with a falling Euro prediction, failed.

Did you do that? No. An ad hominem attack is not an argument.

It just shows that you are a whiner and can QQ. It's the Internet. Anyone can show up and do that shit.

Zap2016's picture

Hi
I don't have almost any knowledge in finance and I'm a supporter of Euro. I would like to know more about how finance can avoid the Euro falling to parity or even below of US Dollar. Please, explain a little more about your vision on that matter so I can learn
Thank you very much

Flamin Rhoid's picture

And AG screamed upward .01 cent.

directaction's picture

Equity markets are closed Friday? 
I had no idea.

 

Yen Cross's picture

  It's just a shortened trading session. The markets, what's left of them, will be open tomorrow. 

logos5's picture

"Dollar flash crashes for no reason whatsofuckingever"

There, fixed it for you. ;-)

Stormtrooper's picture

Incredible how much attention is paid to trading worthless pieces of paper and pretending that one has more value than another at any point in time.  In the meantime, today gold buys roughly the same amount of commodities (that you can put in your belly) as it did 300 years ago.  It should be clear what happens in the end of the funny money game.

King Tut's picture
King Tut (not verified) Stormtrooper Dec 30, 2016 2:30 AM

Perception is reality- if you offered people $500 cash or a 1oz gold coin,  99% would choose the cash. That's just the way it is.

youarelost's picture

Tomorrow the push to 20K

mccvilb's picture

Sounds more like the flush crush.

Phillyguy's picture

US debt is $ 20 trillion and continues to grow. Meanwhile, the US economy continues to stagnate/decline, confronted with very severe and unsolvable problems including high unemployment coupled with anemic job growth- > 90% of “new” jobs are temp position- low pay, no benefits and no job security and increasing debt. Given these economic realities, what is the basis for a “strong” dollar? The only card the US can now play is to pursue an increasingly reckless, bellicose and astronomically expensive foreign policy, which is increasing the chances of a direct confrontation between Russia/China, while making the domestic economy worse. To quote Gertrude Stein, "there is no there there".

Shed Boy's picture

Thats a sad truth. A conflict with either China or Russia will be the kiss of death for America. If were lucky, we won't get nuked and the economy will simply collapse. If we do something stupid....well...i'ts been nice knowin ya'll.
Celente is right...."then they take you to war". It's the last bastian of the scoundrels that run this country.

HokumYTrader's picture
HokumYTrader (not verified) Dec 29, 2016 11:54 PM

Whatever it takes

DirkDiggler11's picture

Long $USD trade is now officially over, the computer just told you so. Broken algo or not, FX fiends pay attention to this kind of price action.

It's the end of the year and December is almost over, so the short PM's trade is also officially over, long PM trade has already started earlier this week and will continue until at least the end of January..

HokumYTrader's picture
HokumYTrader (not verified) Dec 30, 2016 12:06 AM

Those boys over at Citadel are working late tonight to ensure all the stock jockeys have a happy new year

sinbad2's picture

No holiday for the plunge protection team, keep bailing guys, if the dollar sinks we all drown.

J 457's picture

400 DOW dump by next week.  Jan will be ugly.

J 457's picture

400 DOW dump by next week.  Jan will be ugly.

Overflow-admin's picture

Awwww... wake me up when there's a real flash-crash, like USDCHF back to 0.8 in a split second.

 

Could happen anytime, knowing what the SNB monkey can do.

s2man's picture

Yeah.  150 pips?  Let me know when there is a 5% crash.

HokumYTrader's picture
HokumYTrader (not verified) Dec 30, 2016 1:15 AM

Ramping the stawk market overnight for no fucking reason whatsoever since 1987 your PPT.

inosent's picture

bp just finished 3 consecutive yrs of selling. 2017 is likely to close up. it is looking like the European union will probably survive, so the only reason to sell euro is fading away. that might not crystallize until after march when some election results come in. but the thrust of it all is the zio creeps will have to back off and compromise on mass muslim immigration. plus despite zio lovin trump, i think netanyahoo will be disappointed, syria, iraq, iran, egypt, turkey, Afghanistan, etc, Russia, Ukraine, all of them will substantially stabilize, and that will lead to reverse immigration. trump will get credit for it. plus there are major and very conspicuous upside targets for bp and euro. shorts are running out of a reason to stay short.  selling now is like drilling through rock. the easy money is driving sellers out of the market.

peterk's picture

it wasnt a flash crash. no such thing.

EURUSD moved 71 pips in 1 minute twice.... approx 150 pips.

a fast move for sure, but not out of the realms of normallacy .

had it been 500 pip move in 5 seconds, then thats not normal.. artificial.

 

zerohege and other all lke to  birch about  ALGO trading etc, but so what, before it was people in th pits/floor traders

who had inside info looking at the order books etc.. its all the same

BUT when people dont understand a move , they blame it on ALGO computers etc.

Just like the US usong the  FALSE NEWS  card.

 

False nnews, NO NEWS, COMPTER ALGOS,  CITI, FED plunge protection team, YELLEN

its all IRRELEVANT.

A PROFIT IS A PROFIT , A LOSS A LOSS.

No one who made 150 pips on that move today will be complaining... but everyone else will be.

Just trade the  market.

Dr.Carl's picture

 

This article is very misleading. When people keep losing in the markets they pass blame by saying the markets are rigged.  I ask, then why is there at least one analyst who does predict short to mid term buy and sell trades? Here is proof https://t.co/LM81DZlPyF

 

As seen on bulls and bears.

 

AND NO LIBERALS ALLOWED!!!!

 

Obama has made a big mess of things.

 

 

 

Putin is an evil man but he is very intelligent and strong..

 

 

 

Heard a rumour today from some financial advisor friends that Putin's main financial analyst is from the US. Here https://t.co/LM81DZlPyF

 

 

 

But I also heard that this analyst still has close ties with former employer Goldman Sachs. I found that equally as INTERESTING.

HokumYTrader's picture
HokumYTrader (not verified) Dr.Carl Dec 30, 2016 9:39 AM

How do you like working for SHITWAVE

Dr.Carl's picture

 

This article is very misleading. When people keep losing in the markets they pass blame by saying the markets are rigged.  I ask, then why is there at least one analyst who does predict short to mid term buy and sell trades? Here is proof https://t.co/LM81DZlPyF

 

As seen on bulls and bears.

 

AND NO LIBERALS ALLOWED!!!!

 

Obama has made a big mess of things.

 

 

 

Putin is an evil man but he is very intelligent and strong..

 

 

 

Heard a rumour today from some financial advisor friends that Putin's main financial analyst is from the US. Here https://t.co/LM81DZlPyF

 

 

 

But I also heard that this analyst still has close ties with former employer Goldman Sachs. I found that equally as INTERESTING.

Dr.Carl's picture

 

This article is very misleading. When people keep losing in the markets they pass blame by saying the markets are rigged.  I ask, then why is there at least one analyst who does predict short to mid term buy and sell trades? Here is proof https://t.co/LM81DZlPyF

 

As seen on bulls and bears.

 

AND NO LIBERALS ALLOWED!!!!

 

Obama has made a big mess of things.

 

 

 

Putin is an evil man but he is very intelligent and strong..

 

 

 

Heard a rumour today from some financial advisor friends that Putin's main financial analyst is from the US. Here https://t.co/LM81DZlPyF

 

 

 

But I also heard that this analyst still has close ties with former employer Goldman Sachs. I found that equally as INTERESTING.

olebugger's picture

Been the same in the 90s, they called it "programm trading" back then. People need scapegoats and reasons why they lose in the markets.

HokumYTrader's picture
HokumYTrader (not verified) Dr.Carl Dec 30, 2016 9:34 AM

SHITWAVE IS GREAT

Manipuflation's picture

I bought some more silver last night.  I didn't even think to check the price.  Now that I think of it, I am not going to check now either.

Here is where is the money is at these day for me if I can do it.  It's the dope business and it is out west.  I don't want to be a grower, I only want to be a seller of what "High Value" crops need which is not Brawndo.  Some of those jobs are paying $200K a year.  Every requirement for these sales jobs I have.  I need some help though.

I am going to hire a professional resume/cover letter type asshole to get this done.  I am going to be 43 years old and this is where I see the money for what degree and experience I have.  I have no interest in smoking the dope per se.  Not saying I wouldn't but that is not my game.  If anyone thinks I don't know what I am doing then they are incorrect.  Day neutral 90+ degrees.  Derp.  No more Mexican schwag.  I want to sell what they need.

Bachelors degree in horticulture, 20 years of experience both hands on and in sales and am very good with a wrench.  I didn't become a banker and it's it is near impossible to be business owner anymore.  I did everything that I was supposed to do.  

I have abilities to make plants do what I want them to do because I am patient and observant.  I have minor level OCD.  I think you all know that about me by now.  

If you all know of anyone out west who could use some actual professional help I would be interested to hear about it.  I am not going to be a grower.  Forget that shit.  I have shoveled enough shit.  If it isn't six figures then forget it.          

pparalegal's picture

Check with the corporations already jumping in. Just read that they are planning one project:  several hundred acres in Adelanto, CA.

Manipuflation's picture

I have done my own due diligence.  Minnesota is not where I want to live any longer is the other part.  I need to not be here and I have no family here.    

YHC-FTSE's picture

I wish you luck and all the best mate. The producers would be mad not to hire a man of your experience. As you probably know, job hunting can be a mixed bag of experiences none of which is under your control. If you ever need a chat or vent steam, you know where to come - As you say in America, I'm rooting for you buddy.

headfake's picture

"with the world's most actively traded market having become a farcical, flash crashing joke, it is only a matter of time before the next algo-driven freak out returns"

 

When are they going to put an to this madness? 

PPT Inc.'s picture
PPT Inc. (not verified) Dec 30, 2016 8:00 AM

No private actor has $10 billion in free margin for a predatory attack like that. It's easy to say "run stops" but hard to say how this happens, unless you recognize the fact the Central Banks have seized the futures markets and are establishing all asset prices and, by so doing, allocating all wealth.  

Where's me jumper's picture

The only bit I'm interested in is traders dismissing the 1.07 print. So just like China saying 7 didn't happen, fx traders are just deciding whats legit or not.

We'll wake up one morning and no- one will know the price of any of the various gov tokens. And that's when things get interesting fast.