For the third month in a row the Aussie dollar appeared to move before the announcement of the RBA’s interest rate decision yesterday.
It’s an incident that has forex traders perplexed, the RBA concerned and Australia’s corporate regulator, ASIC, investigating.
What’s got everyone up in arms is that someone, somehow, appears to be getting the announcement before the rest of the market. They are then acting on that information and trading the Aussie dollar.
Yesterday, whoever had the information bought Aussie dollars, driving the Aussie from 0.7602 up to a high of 0.7689. Crucially though the timestamp on mine, and it appears everyone else’s, trading platform says that move was in the 2.29pm minute Australian East Coast time.
A move of 80 points in a minute is huge for the Aussie dollar when a normal minute will see a 1 to 5 point move. But the size of the move is not the issue. Bids and offers leave the market before a big announcement which makes the market thin and sets the scene for a big reaction. What’s incredible about these seemingly pre-announcement moves is that they question the integrity of the RBA’s internal security around announcements.
That’s setting the scene for whoever is doing this to get the market to move so aggressively.
It could be a leak at the RBA end which is driving this but as naive as this may be, I doubt it – it is the RBA after all.
The other reason I doubt it’s a leak is that manipulating the market three months in a row when ASIC is investigating seems a little stupid – even for the most idiotic market manipulator. Especially given the recent seven-year sentence Lukas Kamay received for insider trading with ABS data. The chances of getting caught seem extremely high.
But if the timestamps are right, and there is nothing to doubt my MT4 or the integrity of the many other trading platforms out there, then something has gone awry in the RBA’s information dissemination functionality.
We look forward to hearing from ASIC about what exactly is going on.