Boomtime for FX Volumes as New Peak Hit

The latest round of FX turnover data from six of the world’s FX Committees shows volume at its highest level since they started recording results in 2005. The new high mark was powered by new peaks in activity in the UK, Singapore, Japan and Canada.

The total turnover across Australia, Canada, Japan, Singapore, UK and US was $4.883 trillion per day in April 2018, a number only slightly shy of the April 2016 number generated by the Bank for International Settlements (BIS) in its Triennial Survey of FX Turnover. If the six centres maintained their current share of global turnover, the latest report would suggest an FX turnover “BIS number” just shy of $6 trillion per day.

The total turnover beats the previous high set by the FX committee reports in October 2014 by 1.8% and is 12.1% higher than both the April and October 2017 surveys.

The UK continues to make up the bulk of FX turnover at $2.72 trillion per day, a fraction over the previous high water mark also set in October 2014. Year-on-year, activity is up in the UK by 14% thanks mainly to increased activity in FX swaps markets, although all products sets bar FX options (which fell by 4.2% of $6 billion per day) recorded increases.

FX swaps turnover in the UK was $1.4 trillion per day, almost 20% higher than the previous April, while spot FX turnover was $751 billion, a 4% increase. Outright forwards at $296 billion (up 16.5%) and NDFs at $111 billion per day (42.3% higher) also helped drive activity higher.

The US comfortably remains the second most active centre, although it fell short of its previous high mark in October 2014, recording ADV of $993.6 billion in April 2018, up 11.8% year-on-year. 

The largest growth product in the US was spot at $433.9 billion per day, up 15.6% from April 2017, while outright forwards (including NDFs) was $214.6 billion (up 13.4%), FX swaps $300.5 (up 4.6%) and FX options $44.5 billion, (up 18.7%).

In Singapore, ADV hit $523 billion, 3.3% higher than that centre’s previous high set in April 2016, it also represents a 13% increase year-on-year. Singapore actually saw spot and outright forwards activity fall, so the growth was mainly led by FX swaps at $248.2 billion per day, up 3.3%. There was also a surge in currency swap volume in Singapore, up to $75.4 billion per day from $46 billion in April 2017 – a 64% increase that was likely driven by a bank changing its accounting function from Japan, where there was a commensurate drop in currency swap turnover.

Spot ADV in Singapore was $96.9 billion, down 16.3%, outright forwards ADV was $69.9 billion, down 5.3% – FX options activity was broadly unchanged at $32.6 billion.

In Japan, the Tokyo Foreign Exchange Committee reports ADV of $415 billion per day, only the second time (April 2016 being the first at $407 billion) that the centre has surpassed $400 billion per day. Overall activity was up 17.5% year-on-year. There was the aforementioned drop in currency swaps of 45% from the last survey, however elsewhere the picture was healthy with all categories seeing a year-on-year increase. 

Spot FX ADV in Tokyo was $128.4 billion, up 17.6% from April 2017, while outright forwards activity was $60.9 billion, a 16.5% increase. FX swap turnover was $212.7 billion, again a 17.7% increase and FX options ADV was $8.7 billion, a 10% increase.

Interestingly Canada continues to close the gap on Australia, which just four years ago was handling more than twice the volume. In April 2018, total turnover in Canada was $101.8 billion, a 18.1% increase, while Australia handled $122.7 billion, a 2.5% decrease.

In Australia, spot activity rose 19% to $32.1 billion in April 2018, while outright forwards volume was 6.3% higher at $11.9 billion and FX options was 29.6% higher at $1.6 billion. The decline in Australian turnover was almost exclusively in FX swaps, which fell 10.1% to $75 billion, although there was also a 23.8% decline in currency swap activity to $2.1 billion.

In Canada meanwhile, the advance was led by FX swaps, which rose 26.3% to $60.5 billion, while spot activity was up 17.9% to $20.7 billion. Outright forwards activity was 8.7% lower on the year at $13.6 billion, while FX options turnover was 14.3% higher at $4 billion and currency swap activity dropped from $3 billion in April 2017 to $2.9 billion in April 2018.

Twitter @lamboPnL

Twitter @Profit_and_Loss

Colin Lambert

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