Suspicions are growing about whether humans or machines were behind unusual trades in the Australian dollar which correctly anticipated the last three Reserve Bank interest rate decisions.
The Australian Securities and Investments Commission is investigating a spike in the Australian dollar shortly before the RBA's 1430 AEST decision to leave the cash rate on hold at 2.25 per cent on Tuesday.
Given the RBA had been expected to cut in April, the decision to keep rates on hold would have typically sent the Australian dollar higher.
But suspicions have been raised as to why the rally started seconds before the surprise decision.
The corporate watchdog is also looking into similar suspicious movements by the dollar moments before the RBA's February and March rate announcements.
The RBA referred the matter to ASIC last month, after the Australian dollar surged seconds before the March rate decision, with the central bank denying rumours the announcement may have been released prematurely.
While there are logical explanations for the moves, the fact that it's happened three times in a row has definitely got chins wagging among currency traders, says Western Union Business Solutions currency strategist Steven Dooley.
"It almost took the attention away from the RBA's decision in and of itself because it was just such an obvious move," he said.
TD Securities chief Asia-Pacific macro strategist Annette Beacher says the suspicious trade has probably occurred at the hands of machines rather than humans, and is unlikely to be the result of deliberate leaks.
It seems to be the work of `algos', algorithmic or automated trading, which are computer programs set up to make trades on certain headlines or numbers, she said.
"We have no proof here, but what our guys have heard on the ground is ASIC is just going to get a list of trades executed before the 1430 deadline and will be looking at those closely to see whether it's a human or a machine behind the trades," Ms Beacher told AAP.
She said algos were the suspected culprits behind last October's `flash crash', when 10-year US Treasury yields plunged dramatically before quickly snapping back - a phenomenon which has never been properly explained.
"It's this new world we're in, we're still trying to understand how high frequency trading and algos work," she said.
"No offence to ASIC but it's a bunch of public servants trying to understand how financial markets work, so it could take some time.
"ASIC needs to treat this very seriously and hopefully they won't take the short cut and dismiss it."
Mr Dooley says similar investigations around the world have come up short, because it's difficult to prove.
"We may never get any answers on this one," he said.
Financial blog Zero Hedge says the RBA decisions were "clearly leaked" and was less than hopeful about getting any answers.
"The internal investigation, we are almost sure, will turn up nothing but an illiquid market that swung violently on a good guess by a few traders... sure, whatever."
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