Currency markets were thrown into a spasm early in Asia on Thursday, with the Japanese yen surging during less-than-liquid trading hours, following weeks in which market sentiment has soured.
The U.S. dollar fell by as much as 3.7% against the yen, immediately following a weaker-than-expected sales forecast from Apple Inc. that was issued after U.S. markets closed. The currency retraced much of its move in later trading, and was recently down 1.1% against the yen at 107.63 as European markets opened.
Traders pointed to a significant jump in currency trading volumes on Japanese retail trading platforms, poor liquidity elsewhere in the market, and the fragility of investor sentiment after a bleak and volatile end to 2018 as key factors behind the market moves.
Theres very thin liquidity, said Michael Turner, currency strategist at RBC Capital Markets, based in Sydney. It seems like everyones taking any cues to sell whatever they can.
The Apple result being poor, can you really blame that? he added, In ordinary times, people wouldnt bother with a theory like that, but in this sort of skittish environment anything can happen.
The yen tends to be popular as a so-called haven currency during times of economic or political turmoil. Japanese investors often repatriate overseas investments during weak market periods, driving up the value of the yen.
Other currencies were hit during Thursdays sharp repricing. The British pound was down 0.4% against the U.S. dollar at $1.255, while the Australian dollara common barometer of risk appetitedropped 0.3% to $0.696.
Moves against some other currencies were even l...