FX Update: Cable printed a "flash crash" low of 1.1841
FX Update: Cable printed a "flash crash" low of 1.1841 on EBS just after the Asia open, while Reuters report a low of 1.1491 (which they have revised up from an initially reported 1.1378). The spark for pound seeling was remarks from France PM Hollande, who said of Brexit that "it is not possible ... to leave the EU and get the advantages without the obligations," otherwise "analysts would jeopardise the fundamental principles of the EU." Illiquidity, algorithms and talk of a "fat finger" trade were debated in market chatrooms as being factors at play. The pound quickly recovered back above 1.2400, only to fall back to the 1.2350 area, which is about two three figures down from yesterday's New York closing level. Analysts expect trading in the pound to remain choppy, but with a sell-into-rebounds bias as tough Brexit negotiation stances of both the EU and UK have come into sharp form this week. Assuming both sides follow-through, the fear is that UK will find itself outside the single market with a lower terms of trade position. Elsewhere, the euro traded generally softer following rebuttals from ECB members that QE tapering is on the table, while the yen traded moderately firmer amid a risk-off backdrop.