Algos and fat fingers are getting the blame this week for some strange moves. While both blips were unsettling, they were also rapidly retraced.
A hiccup in EUR/SEK was first. It happened at 6.43am London time on Tuesday; very little appears to have gone through and the price immediately returned to the 9.50 area after a brief excursion to 8.1600. As that is where EUR/NOK was trading at the time, it seems a fair guess that some bleary-eyed trader unfortunately hit the wrong cross. A painful way to wake up.
The second error created much more chatter, though no one seemed to know whether the driver was cable or EUR/GBP.
Just before 8 on Wednesday morning, cable got sold off from above 1.5300 to below 1.5200 in a matter of seconds, but was back to 1.5300 half an hour later. And then it spent the rest of the day selling off again to settle comfortably at the morning’s low. It really is a funny old game.
‘Algo error’ was a favourite rationalization for the cable wobble. But there were other, more amusing explanations around, including one that traders had seen a Bank of England announcement of the seven-day USD repo and had interpreted it somehow as saying that the Old Lady was going to open a dollar swap facility with the Federal Reserve.