After seeing a bit of a rebound in March, volumes ticked mostly lower in April once more as uncertainty returned to the financial markets. Another factor that dampened trading activity last month was the higher number of bank holidays during the Holy Week.
Forex ECN Hotspot FX reported a 7% month-over-month decline in April trading volumes from $29.7 billion average daily volume (ADV) to $27.7 billion. GTX, which is the institutional arm of Gain Capital Holdings, chalked up a 5% monthly decline in ADV from $11.8 billion to $11.5 billion.
As for FastMatch, which is jointly owned by Global Brokerage Inc, Credit Suisse and BNY Mellon Corp, trading volumes dipped by only 1% last month from its best-ever $19.2 billion ADV in March. With that, it’s April ADV of $19 billion is still well-above the firm’s earlier record of $17.1 billion ADV in November 2016.
For derivatives marketplace CME Group, trading activity slumped by 19% on a month-over-month basis to 788,000 contracts. Still, this is 2% higher than the number of contracts in the same month last year. Meanwhile, EBS saw trading volumes slump to their lowest level since August 2016 at $76.1 billion ADV. Multibank aggregator FXSpotStream recorded a 9% drop in April volumes.
Over in Japan, the Tokyo Financial Exchange reported a 16.7% monthly drop in April FX trading volumes based on Click 365 contracts but still saw a 28.5% increase from April 2016.
Most dollar and yen pairs saw a decline in contracts for April, led by lower volumes for USD/JPY and EUR/USD. What’s interesting is that Guppy posted only a mere 9.1% dip in volumes while EUR/JPY saw a 37.1% gain. Yen comdoll crosses such as AUD/JPY and NZD/JPY saw small reductions in contracts.
As in March, traders still seem hesitant to put money on the dollar due to uncertainties surrounding the Trump administration. Not even the tax reform announcement was enough to spur dollar domination then since investors seemed unimpressed after all those months of speculation.
In contrast, interest in European currencies appears to have picked up when the first round of the French elections left Macron and Le Pen to battle it out in the final round this month. The surprise announcement of snap elections in the U.K. also shielded pound pairs from suffering weaker volumes towards the end of April while the yen seems to be simply reacting to country-specific action lately.
This month, it looks like dollar traders are trying to flex their muscles after the latest FOMC announcement kept rate hike expectations in play. The Loonie is also sharing some of the spotlight on crude oil price action and potential rifts in Canada’s trade ties with Uncle Sam. Any other factors you think might impact FX volumes this May?