After showing mixed results in October, forex players cranked up the volume last month, thanks to game-changing market catalysts. Institutional trading, retail FX activity, and global exchanges all chalked up gains, with some even reporting their best volumes ever!
Data from international derivatives marketplace CME Group indicated that foreign exchange volume averaged 987,000 contracts per day in November, translating to a 28% increase over 771,000 contracts per day in October. This also marks a 39% year-over-year gain, driven by a 61% jump in GBP futures and options. Thomson Reuters reported that spot FX volumes rose to $101 billion last month, its highest level since June when the EU referendum was held.
Institutional trading platform FXSpotStream reported a whopping 30% monthly gain to $22.3 billion average daily volume (ADV), reaching a record high in activity at $49 billion in a single day just after the U.S. elections. Keep in mind that this multibank FX aggregator provides services for the likes of Goldman Sachs, Morgan Stanley, Standard Chartered, UBS, Citi, and HSBC so this means that the big dogs are definitely taking advantage of all the action in the forex arena.
GTX, the institutional arm of Gain Capital Holdings, also enjoyed record highs in volume for November at an ADV of $10.34 billion, surpassing its June 2016 levels. Meanwhile, retail forex broker Exness reported a meager 2% bump up in activity for November to $212 billion. GMO Click posted a more impressive 64.55% month-over-month increase and Japanese forex broker Monex saw a 29.95% rise in Global Daily Average Revenue Trades.
Moving over to exchanges, the Moscow Exchange reported a monthly increase of 8.4%in FX market turnover. The Tokyo Financial Exchange posted a 40.3% gain in Exchange FX Margin Contracts on the Click365 platform, nearly ten times as much as the previous month’s 4.5% increase and amounts to a 93.4% year-over-year gain.
The breakdown of currency pairs traded reveals that the biggest monthly gains in volume were seen on the Turkish Lira-Japanese yen, AUD/JPY, USD/JPY, and AUD/USD. On a year-over-year basis, GBP/USD has outpaced the rest of the pack with a jaw-dropping 329% increase in volume while GBP/JPY came in second with a 181.7% gain.
While most of the forex action was centered on the U.S. elections last month and the strong rebound in risk appetite that followed, these numbers also revealed that the British pound managed to stay in the spotlight and continue to benefit from Brexit-related headlines then. Among the price drivers for sterling then were PM May’s remarks reiterating their Brexit timeline, the BOE Autumn Forecast Statement, rumors that Carney is working on a “Brexit Buffer” and tough talk from EU officials. Whew!
All this action could wind down in December, as the focus shifts to the upcoming FOMC decision and most traders start closing out their positions before the end of the year. But with a few more weeks left, there might still be some room for some surprises before 2016 comes to a close. Be careful out there!
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