Volumes in October drop to $5 trillion, growing long term
In its recently released Triennial Survey which was conducted between 2010 and 2013 the Bank for International Settlements has reported that April of 2013 was the month with the highest forex volume on record – $5.3 trillion dollars per day were shaking hands in the market.
Since then volumes have modestly pulled back, with activity subsiding not only in the Japanese Yen against the US Dollar, but in the Euro to the US Dollar as well. According to the data in the survey, in October the total worldwide forex transactions per day pulled back to $5 trillion. In the context of the previous Triennial Survey from 2010 the trend has been remarkably steady as volumes totaled just below $4 trillion at the time.
The survey is released once every three years and has a variety of data points which we cannot cover in a single article. However since LeapRate covers mostly the retail sector of the market we will certainly take a glimpse at conclusions that can be drawn for this sector of the industry. We have earlier reported on some of its preliminary results and the controversy that we feel is surrounding those, however lets get into some detail on the retail FX component.
The BIS acknowledges how retail-oriented platforms such as FXCM, which is one of the brokerages in the LeapRate approved list and Oanda have changed the nature of the market during the last decade and it is no longer the privilege of mainly large financial institutions and big corporations. Retail volumes have accounted for 3.5% of total turnover and 3.8% of spot turnover. In absolute terms the amounts traded in Japan and the US are leading the sector.
Retail trading centers are completed by the United Kingdom, France, Switzerland, Hong Kong and Singapore. Germany is also here, however for some reason spot trading volumes are negligible when compared to the rest of the world we find that to be rather awkward. While the US is leading in global retail volumes overall, Japan maintains its lead in spot trading.
In a curious breakdown of retail Japanese volumes by currency pair the carry trade seems to be alive and kicking with the NZD/JPY taking top spot with about 35% of total. It is followed by EUR/JPY, GBP/JPY, AUD/JPY, EUR/AUD and ZAR/JPY. It would be interesting to know how was this data collected, carry trades have been out of fashion for the past couple of years, yet the past year with the dramatic increase in volumes could be explaining the huge share of the NZD/JPY cross.