June 2016 Forex Industry Metrics: Volumes Surge on Brexit

Unlike the lackluster trading activity seen in the previous months, volumes jumped to record highs in June thanks to the EU referendum. And that’s even after most forex brokers implemented trading restrictions on several European currency pairs and assets in anticipation of unprecedented volatility!

Data from international derivatives marketplace CME Group showed that forex trading volumes averaged 1.02 million contracts per day in June, a whopping 42% increase from the previous month and up 3% on a year-over-year basis. Apart from the 65% jump in British pound futures and options, emerging market currency pairs also saw a strong increase in average daily volumes (ADV), especially for the Brazilian real and the Russian ruble.

Interdealer broker ICAP reported that forex volumes at its EBS subsidiary averaged at $97.4 billion per day in June, up 29% from May but still below June 2015’s $100.8 billion ADV. Meanwhile, institutional trading platform FastMatch saw volumes increase 44% to average $16.3 billion last month, boosted by the record daily high of $39.8 billion when the Brexit results were announced on June 24.

Another institutional platform FXSpotStream reported an all-time service record for its total monthly forex volumes, which reached $456 billion in June, overtaking the previous high at $441 billion in February. On an ADV basis, daily trading activity stood at $20.8 billion in June, up 29% from the previous month.

Moving over to exchanges, data from Tokyo Financial Exchange’s Click365 platform indicated that volumes surged by a jaw-dropping 56.2% in June 2016, also recording an impressive 23% gain from the same month a year ago. This put an end to consecutive monthly declines in volumes that started in March this year.

Data from Tokyo Financial Exchange

Data from Tokyo Financial Exchange

Looking at the breakdown of currency pairs traded for the month shows that trading volumes tripled for GBP/JPY and EUR/JPY (No surprises there!), followed by strong gains for other yen pairs and GBP/USD. It’s also worth noting that GBP/USD volume skyrocketed 937.1% from last year!

Forex brokers Saxo Bank and Hotspot FX also reported healthy gains in volumes, with the former seeing a daily average of $11.9 billion in FX trades and a June total of $261 billion. Meanwhile, Hotspot FX reported a 23% increase in ADV to $28.8 billion last month.

So is this surge in forex trading activity likely to be sustained this month? Probably not. As you’ve likely observed from the price action during the week after the EU referendum, volatility subsided for pound and euro pairs as traders are waiting to see what the UK government and EU officials will come up with.

Still, there are a bunch of catalysts lined up this month as several major central banks are set to announce their monetary policy decisions. Market watchers are on the lookout for significant adjustments in policy biases and might be treated to another batch of strong forex moves if additional easing efforts are made.

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