Minding the liquidity gap
This year, fears over liquidity became a real cause for concern
On the surface, liquidity in spot markets is better than it has ever been. Foreign exchange is the only market where volumes continue to grow while spreads tighten, but this is only true on good days – days when three-big-figure moves don't happen unexpectedly in EUR/USD, the world's most liquid currency pair, where spreads have also widened.
These abnormal days, when prices spike 4–5% before settling back to their starting level, are becoming more commonplace and this may well be the new normal
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