Those wide spreads you are seeing in yen crosses are a feature, not a bug

I posted here as the first wave of intervention was hitting on why this is a cheap time of day to do it:

• USD/JPY slammed lower

If you are unaware of how the forex market works today has been an excellent lesson. Its touted as as a 24 hour market, and it is, but some times of day are characterised by stupidly-thin liquidity.

Like, right now its:

8:48am in New Zealand, FX desks are fully open

6:48am in Sydney – too early to be fully open for interbank trade

5:48am in Tokyo

4:48am in Singapore and Hong Kong

4:48pm in New York – finished for the day bar a few stagglers

9:48pm in London

Yes, the algos are still active, but without interbank liquidity they are beating each other up.

This is a very cheap time of day for intervention to get ‘bang for the buck’ – it doesn’t take too much to move FX compared to the thicker liquidity time of day.

USD/JPY update, wild swings:

Up a big figure from its low – that’s only a few spreads in this market.

This article was written by Eamonn Sheridan at www.forexlive.com.