FXWW News

Pre-RBA AUD move most likely related to liquidity and Algos

Based on what I’m hearing in the market, Tuesday’s ‘gap’ higher in the AUD/USD just prior to the release of the RBA rate decision was more likely due to structural liquidity issues and the prevalence of Algos rather than any sinister leak.

Since the SNB debacle, banks are becoming even more cautious when risk-events are scheduled. Immediately prior to the announcement (between 30/60 seconds), major electronic pricing providers cancelled many orders within a certain radius of the price at the time (it was around .7780). There are a large number of big algorithmic trading accounts  which would react immediately (within milli-seconds). Obviously the skew in the market after the orders were cancelled was heavily biased to the topside, hence the Algos initiated the sharp gap to the right.