Anatomy of an opening FX gap: USD/JPY

The news that moved the FX market hit early Monday in Asia, the only market open was New Zealand

Traders who haven"t seen the news and price action (its still the weekend for most of the world) will see this:

• FBI clears Hillary Clinton on classified emails
  


• Monday FX price update - on the move here following Clinton news

They may look at a chart that appears something like this (USD/JPY, 5 minute candles):

Big gap, right? Mmmmm, well, sorta, but this is the trading that took place prior to the first price for the new week in the chart above:

If you are new to the financial markets, note that early on Monday morning the only markets in the world open are NZ FX (mmmm .... physical bonds too, if you can get a price). Traders who want to hedge positions in equities, equity futures, oil, gold & what-have-you cannot trade in these markets, its FX or nothing. Moves can be exacerbated as traders who may be short S&P futures are unable to buy these to cover will buy USD/JPY or sell EUR/USD (if they have access to trade with NZ banks that is) as some sort of hedge, imperfect it might be but it"s the only choice.

Anatomy of an opening FX gap: USD/JPY
Anatomy of an opening FX gap: USD/JPY
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