Market players were unable to sustain the strong surge in activity during the latter part of June, leading to marginally lower volumes in July. Could this be a result of subdued liquidity during the summer months, too?
Derivatives marketplace operator CME Group reported a 15% drop in forex contracts per day from 1,014,000 in June to 863,000 in July. Still, this represents a 19% year-over-year gain since July 2016.
FXSpotStream also reported a considerable drop in activity of 13.6% from the previous month’s $20.31 billion average daily volume (ADV) to just $17.55 billion in July. This amounts to a 10.7% decline from the same month last year.
Forex ECN FastMatch saw a smaller 9% monthly drop in forex activity from $19.7 billion ADV in June to $18.0 billion last month, although the figures echoed the same behavior in June wherein volumes were off to a slow start before kicking higher at the end of the month.
Over in Japan, the Tokyo Financial Exchange saw a 4% dip in activity in July, down 32.2% on a year-over-year basis.
The breakdown of currency pairs traded reveals that the AUD/USD pair enjoyed an impressive 53.6% increase in volumes for the month, amounting to nearly twice as many contracts from the same month last year. On the flip side, pound pairs namely Cable and Guppy saw considerable declines.The strong upside break on AUD/USD in July likely drew more traders in, along with the pickup in risk appetite supporting comdolls, while uncertainty over BOE policy changes kept sterling treading cautiously. Other exchanges also reported higher volumes among euro and Loonie pairs towards the end of July, likely fueled by ECB tapering expectations and positive reports from the crude oil market.
Institutional ECN Hotspot FX reported only a marginal dip of 3% last month at an ADV of $27.1 billion, also exhibiting a significant pickup in activity towards the latter part of July. GTX, which is the institutional arm of Gain Capital Holdings, also reported relatively steady volumes from June to July at $270.1 billion to $268.6 billion, respectively.