Not sure what to make of this one, besides – crikey! – world markets sure do seem to be one, gigantic, interlocked beast.
This shows yesterday’s (Friday 10-12-18) “”market”” action and the amazing correlation between the price of Yen in USD and the SPY (ETF that tracks the S&P 500).
When I write of “out of parameter” breakdowns that might happen, above we see that “within parameters” for some set of trading algorithms is that the USD/JPY tracks the S&P 500.
“Out of parameter” might see that correlation break down. Then what would these tracking programs do? Probably shut down, is what. What effect would that have?
Beats me. I have no idea how big these programs are, but they are apparently large enough to move a major currency cross-pair in lockstep with a US index. Either that or the BoJ is up to something I can’t quite figure out.