January 2016 Forex Industry Metrics: Off to a Good Start!

It looks like this year was off to a good start in terms of forex activity, thanks to strong moves in the equities and commodities arena. While stock investors must’ve had plenty of headaches from the sharp market declines for the first three weeks of January, forex junkies seemed to be partying with their risk-off trades. Volatility, baby!

Online trading services provider Monex Group reported a 28.5% jump in forex volumes month-over-month, following a relatively good performance in December last year. CME Group, which is an international derivatives marketplace, also indicated a pretty decent 9.7% gain in average daily volume to 970,000 contracts in January 2016.

Hotspot FX, which is the electronic forex institutional platform of BATS, recorded a 27.5% increase in trading volumes for the same month. In addition, the firm reported that the strongest day for trading activity was January 29 (Any guesses what happened then?) with volumes spiking to $49.7 billion.

Meanwhile, Interactive Brokers registered a 32% in daily average revenue trades at 830,000 for January, which is also up 23% from the same month in the previous year. Another retail forex broker, EXNESS, reported a 9.6% increase in forex trading activity as volumes rose to $197.3 billion, up 6.8% from a year ago. New client accounts also increased from 27,430 at the end of December 2015 to 32,601 by the end of last month.

In Japan, institutional electronic FX platform FastMatch marked January as the first month during which volumes topped $10 billion in ADV since 2014. Volumes on its currency platform surged to $11.8 billion, 25% higher than that of December 2015. Aside from that, Japanese online trading services provider GMO Click boasted of a steep 59.3% rise in forex volumes for January.

Based on the breakdown of currency pairs provided by the Tokyo Financial Exchange, the most actively traded one was AUD/JPY followed by NZD/JPY, presumably due to the effect of China’s slowdown fears on the commodity currencies as well as the impact of the BOJ’s negative deposit rates.

Data from the Tokyo Financial Exchange

Data from the Tokyo Financial Exchange

What’s interesting to note also is that GBP/USD recorded the largest change in trading volumes on a year-over-year comparison at a whopping 320.1% gain followed by GBP/JPY’s 95.1% increase. Possibly a result of the BOE’s shifting monetary policy bias?

Even though traders appear to have calmed down over their Chinese slowdown fears these days, there are still plenty of catalysts that could keep volatility and strong trading volumes in play for this month. Among these are monetary policy statements, talks of an OPEC meeting, and speculations about a Fed rate hike in March. Do you think February will shape up to be another positive month?