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‘Flash-crash’ moves hit Asia currency markets on Thursday morning

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Japan's currency rose as much as 3.7 per cent to 104.87 in early Asian trading, the highest level since March 26, triggering a series of violent currency moves in lower-than-usual volumes due to a holiday in Tokyo.

[SINGAPORE] The yen jumped while the Australian dollar plummeted on Thursday morning in what strategists and traders said was an apparent "flash crash" triggered by algorithmic-platform pricing hitting a patch of thin liquidity amid fresh worries over global growth.

Japan's currency rose as much as 3.7 per cent to 104.87 in early Asian trading, the highest level since March 26, triggering a series of violent currency moves in lower-than-usual volumes due to a holiday in Tokyo. The moves came after news that Apple Inc had lowered its revenue outlook citing weakness in China's economy and other emerging markets. The Australian dollar, often seen as a proxy for China and emerging-markets, plunged as much as 3.5 per cent to 0.6741, lowest since March 2009.

"The Apple news is driving safe haven flows, which have seemingly triggered a flash crash in FX," said Brad Bechtel, global head of foreign exchange at Jefferies LLC.

Alan Ruskin, chief international strategist at Deutsche Bank said that a "very thin" and "one-sided market", as New York trading ended and Tokyo is closed, potentially added to the currency moves.

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Japanese retail investors may also be behind the sharp currency swings, according to Ray Attrill, head of foreign-exchange strategy at National Australia Bank in Sydney.

"AUD/JPY is one of the more active pairs traded by Japanese retail. Algorithms would probably have then got involved after the initial run, I'd imagine," he said.

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