February 2016 Forex Industry Metrics: Mixed Picture

After a strong start in January, forex trading volumes appeared to level off last month, possibly due to seasonal factors. Keep in mind that the Chinese Lunar New Year and Spring Festival usually takes place in February, which means that several forex traders in the Asian region probably took time off to enjoy the long holidays then.

International derivatives marketplace CME Group reported a 1.7% month-over-month decline in average daily trading volume (ADV) of forex contracts, even though other market segments such as equity indices and commodities saw monthly gains. Still, the February forex ADV of 954,000 contracts was 25% higher compared to the same month last year.

For Interactive Brokers, one of the largest online trading providers in the U.S., daily average revenue trades (DARTs) were down 8% compared to January 2016 levels but were up 21% from February 2015. This was also the case for FastMatch, which is an institutional electronic FX platform, as it reported a 5.9% monthly decline in average daily volumes but saw a jaw-dropping 94.7% jump from February last year.

Meanwhile, Hotspot FX carried on with its strong pace by showing an increase in forex trading volumes in both monthly and annual terms. Its February ADV of $32.6 billion is 6.2% higher compared to the previous month, representing a 23.5% increase from the previous year.

Over in Russia, Moscow Exchange reported an average daily turnover of 1.45 trillion RUB for February, 5.9% lower compared to January’s figure but 40.8% higher than February 2015’s 1.03 trillion RUB figure. Its total FX market turnover for the month stood at 30.5 trillion RUB, up 10.1% from January 2016 and up 55.6% higher on a year-over-year basis.

In Japan, the Tokyo Financial Exchange (TFX) chalked up its third consecutive monthly gain in Click 365 forex volumes to 4,467,666 contracts. That’s 3.2% up from January 2016 and 65.8% higher compared to February last year. Based on its breakdown of currency pairs traded, GBP/USD recorded the sharpest gain in volumes, most likely due to Brexit talks going on then.

Data from the Tokyo Financial Exchange

Data from the Tokyo Financial Exchange

EUR/USD came in second with its 77.1% gain in monthly trading volumes while other actively traded pairs then include USD/JPY and GBP/JPY, based on the number of contracts.

It’s also worth noting that comdoll pairs seem to have retreated in terms of trading volumes for February, most likely because fears of a global slowdown stemming from China have taken the backseat then. Forex traders seemed to focus more on discussions about an oil output freeze, although the uncertainty still weighed on CAD/JPY volumes.

Moving forward, it looks like we’ve got another set of market themes pushing forex price action at the beginning of this month. I’ve got a good feeling that central bank monetary policy biases might come into play again, with the Fed and the ECB widely expected to make some adjustments. Any other major catalysts you think we should watch out for?