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Currency Trading Hits New Highs in UK and US: FX Committee Surveys

Foreign exchange trading activity in the UK and US rose to record levels in October, reports from the nations’ central bank FX committees show, on the back of increased volatility that was largely triggered by a divergence in monetary policies.

Average daily currency turnover in the UK rose to a record $2.67 trillion, up 11% from $2.4 trillion in April 2014 and 19% higher than $2.2 trillion in October 2013, according to the Bank of England’s Foreign Exchange Joint Standing Committee (JSC) in its 21st semi-annual turnover survey, published on its website today.

“This is the highest level of turnover recorded since survey inception,” the JSC says.

Average daily volume in North America was $1.1 trillion, the highest since the survey began in 2004, according to the Federal Reserve-sponsored Foreign Exchange Committee. This is a rise of 35% from $811.1 billion in April and 34% higher than $816.3 billion recorded in October 2013.

In the UK, turnover in most products rose to new survey highs. FX spot turnover climbed 40% to $1.1 billion per day, up 44% year-on-year, with turnover in EUR/USD rising 18% from April to a record $805 billion per day. FX swap turnover was the only product to fall compared to April and was down by 14%.

Average daily spot volume in the US increased 62% to $570.7 billion compared to April. Similarly, FX options volume increased by 66% to $64.8 billion and forwards volume rose by 20% to $220.4 billion. Swap volume remained flat at $239.3 billion.

Implied volatility rose in October, a month after the European Central Bank cut interest rates to record levels to support economic growth and revive inflation. In the US, the Federal Reserve said it would end a bond-buying programme just days before the Bank of Japan unexpectedly increased bond purchases under its quantitative easing stimulus strategy on 31 October.

The diverging policies, combined with widespread political risk, have helped boost a recovery in trading over the past few months

In Japan, turnover in average daily trading was $373.2 billion in October, up 3% from $362.9 billion in April and flat year-on-year, the Tokyo Foreign Exchange Market Committee said in a statement earlier today.

In Singapore, daily turnover was $319.5 billion, a rise of 10% from April’s $290.5 billion a day and 13% higher than $282.2 billion recorded in October 2013. In Canada, turnover on an average daily basis rose 3.8% to US$60.4 billion in October from US$58.2 billion in April.

The Reserve Bank of Australia was the only committee to reveal a drop in volume, both month-on-month and year-on-year. Average daily volume was $150.3 billion, a decline of 14% from April, and 15% lower over the year.

The committees collaborate with each other to release their surveys on the same day.

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