Dollar/Yen Currency Pair Flash Crash 1/3/19

1/2/19; AAPL flash crashes -8% after the closing bell on lower guidance. Apple throws a wet blanket on markets to begin 2019. The announcement sends shockwaves around the world. CEO Cook blames the trade wars and slumping iPhone sales in China. The year is off and stumbling.

1/3/19; In Asia trading, Apple supplier Samsung Electronics loses -3% and SK Hynix collapses -5%. In Europe, Dialog Semi flash crashes -9%. AMS flash crashes -21%. ST Micro -7%. Siltronic -4.3%. ASML -3%. Logitech -3.5%. The weakness in Apple and its suppliers creates concern over the status of the luxury goods buyer. Apple iPhones have become very high-priced. LVMH tumbles -3%.

A flash crash event occurs in the dollar/yen currency pair collapsing from 108 to a 104-handle then recovering back to 107.61 all in 7 minutes. The Apple news creates sogginess in the US dollar index. At the same time, global investors are seeking safety in the yen. Japanese markets are closed so the lack of liquidity exacerbates the flash crash. Japanese retail investors are also blamed. The trade disputes and weakness in China’s economy also compounds the flash crash.

The dollar/yen pair plummets from 108.80 to 104.10 the lowest number since March 2018. The lower pair corresponds to a weaker dollar and stronger yen. The yen has strengthened nearly 7% over the last few days. USD 96.56.

The TRY-JPY pair is at 19.802 experiencing a wild 4.3% price move a four standard deviation plunge on the chart. S&P futures are down -38 points. The AUD-JPY pair is at 74.90 with a 1.5% move. Professional traders take advantage of the low liquidity aiming at and hitting the stops creating the market mayhem.

If the dollar/yen pair drops towards 100 reflecting the ever-stronger yen, the BOJ will have to provide more stimulus. This is a problem since the Bank of Japan has shot all its bullets. It has already bought up nearly all available assets including bonds, stocks and ETF’s. Japan is failing at reinflating their economy.

The BOJ, Fed, ECB and other global central bankers are sick souls. Over the last decade, they have succeeded in making the wealthy elite class more filthy rich while selling-out common folks that do not own any stocks. Japan may be headed towards a financial crisis that could trigger global contagion in 2019.

At 6:16 AM EST (11:16 AM London; 12:16 PM Frankfurt; 8:16 PM Tokyo), the dollar/yen is at 107.62. USD 96.61. S&P futures -40. VIX 26.04. 10-year yield 2.63%. DAX -1.2%. AAPL -9%. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here. Consult your financial advisor before making any investment decision.

NOTE: The chart above is provided by TradingView and annotated by Keystone.

[The major flash crashes and flash spikes from the historic May 6, 2010, flash crash to present are chronicled in the Flash Crashes, Fat Fingers and Computer Glitches Oh My! 3rd Edition available from Amazon]