SYDNEY: The Australian dollar was picking up the pieces on Thursday after a torrent of automated selling against the yen sent it plunging to multi-year lows on a host of major currencies.
The Aussie suffered some of the largest intra-day falls in its history amid a drought of liquidity and a cascade of computerised sales, report agencies.At one point it was down 5 per cent on the yen and almost 4 per cent on the US dollar, before clawing back much of the losses as trading calmed and humans took charge.
"Violent moves in AUD and JPY this morning bear all the hallmarks of a 'flash crash' similar to that which befell NZD in August 2015 and GBP in October 2016," said Ray Attrill, head of FX strategy at National Australia Bank.
"The fact that over half the move down in both these pairs has since been retraced is testimony to today's moves being first and foremost a liquidity event."
One theory was that Japanese investors who had been crowded into trades borrowing yen to buy higher yielding currencies, were forced out en masse when major chart levels cracked.
The Aussie tumbled as far as 72.26 yen on Reuters dealing, a level not seen since late 2011, having started around 75.21.
When the smoke cleared, buyers returned and it was last changing hands at 74.40 yen.