Markets

EURUSD tumbles as liquidity conditions worsen

EURUSD now down over 100 pips from the highs

Now that the Fed and BOJ is in the rearview mirror liquidity has suffered further.

In the options market, spreads have blown out as liquidity drops. GBP liquidity is said to be down by over 50% and the other majors have between 30-40% less liquidity. Spreads have widened and some platforms have disabled option trading altogether.

If it's like that in the options market it's not going to be much better in the rest of the FX market.

There's been no real news to tip the euro, and probably a lot of it is down to the Brexit fear and following cable lower. I expect the euro to become even more tied in with the sentiment on the UK vote due to what the fallout of an exit may mean for the rest of Europe.

We're also going to see liquidity drop further when England play Wales in the Euro's at 13.00 GMT, as traders switch from trading screens to tv screens.

Once again this is a warning of what conditions may be like in the days ahead. Watch your trades, watch your broker spreads and make sure you are in control of your trades.

The US is set to enter the fray shortly and they'll get a chance to react further to the FOMC and cast their impressions of the BOJ so we might get a liquidity injection from them.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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