The average global daily forex value in July was $4.71tn, down 13.7% on June’s $5.46tn according to CLS data for FX volumes.
The numbers were virtually unchanged compared to last year although volatility was around double what it is now.
Reuters own trading systems saw volumes fall to an 18 month low at $99bn but were up 8.0% on the year to $344bn. EBS vols were down 8% m/m and -21% from a year ago.
In the UK, fx trading turnover in the 6 month period to April 2014 saw a 7% rise from October 2013 but were 6% lower that the same period a year earlier, although that period set record highs. Daily turnover was $2.4tn (don’t go writing off the size of the UK financial markets just yet)
Turnover in all foreign exchange related products was up against the prior 6 months with spot +3% to $795bn per day (-21.0% y/y) and swaps +8.0% to $1.22bn.
One of the reasons for slowdown in turnover can be the lack of arbitrage due to the low rate environment. The flip side is that what little there is to grab necessitates higher volumes with which to grab the returns. That’s shown in the volumes almost being the same despite volatility being half what it was last year.
Volatility has picked up over the last couple of weeks but it’s still sporadic. When rates do start to go up we should see a pick up in volatility as the yield chasers start shifting their money about. Irrespective of any interest rate front running and current currency levels the chasers won’t be moving until the returns are actually there. It could mean we see increased trading around the month/quarter/half end flows. At least we’ll hope so anyway
