Algorithmic trading boosts market liquidity, withstanding COVID-19 market stress.
Algorithmic trading in foreign exchange markets has been increasing, with automated transactions based on pre-set programs. The study focused on USD/JPY spot market and found that algorithmic trading has been rising since 2016, especially in European and U.S. time zones. It helps improve market liquidity in normal times and maintained this function during the COVID-19 pandemic, except during severe stress when sharp price fluctuations occurred.