Currency trading volumes hit record highs in the first quarter

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LONDON (Reuters) – Currency trading volumes hit an all-time high in the first three months of the year, data showed Thursday, as an increase in volatility from multi-year lows encouraged more buying and selling of currencies.

FILE PHOTO: US Dollar and Euro banknotes are pictured in Frankfurt, Germany in this illustrative photo taken on May 7, 2017. REUTERS / Kai Pfaffenbach / Illustration / File Photo

Figures released by CLS, one of the leading traders in the forex market, follow a huge increase in trades on Thomson Reuters trading platforms, with its March volumes up 28% from last year and just under February, its best month ever.

The increase in currency volumes will be welcomed by trading platforms and banks which have struggled with calm financial markets by slashing profits in recent years.

Wall Street banks Goldman Sachs and Morgan Stanley this week announced an increase in first-quarter profits thanks to an increase in business activity, although Morgan Stanley executives have warned that results for the remainder of the year. years might not be so strong.

After volatility peaked during a sudden sell off in financial markets in January and February, price movements returned to lower levels, with price movements in the larger currencies particularly weak.

Market participants say April has been a quiet month so far, with currencies mostly ignoring growing geopolitical tensions, concerns over a possible US-China trade war and the prospect of a boom. of global economic growth is approaching its peak. Key currency pairs remain stuck in narrow price ranges.

“The currency markets are in a wait-and-see mode,” said Thu Lan, FX analyst at Commerzbank in Frankfurt. “Everyone is waiting to see the first steps of (monetary policy) normalization from central banks.”

Emerging market currencies, especially the Russian ruble after new US sanctions were announced against Russian businesses and oligarchs, may have held up better in April, but these currencies are trading in volumes well below currencies. of the “G10” like the US dollar, euro and Japanese yen.

(For a chart on “Currency Volatility Index”, click on reut.rs/2JX6Q5G)

CLS said in a statement that the average daily traded currency volumes submitted to it reached $ 1.87 trillion between January and March, breaking a previous record of $ 1.67 trillion in the first quarter of 2013.

Daily volumes in March reached $ 1.855 billion, down 4.8% from February but up from a year earlier.

In addition to volatility, CLS attributed the rise in volumes to a trend of more companies buying like asset managers using its services.

Average daily volumes of spot and derivative currency trading reached $ 461 billion in March, slightly lower than the record February when volumes reached $ 463 billion, Thomson Reuters said.

The NEX Group, which owns another large FX trading platform, saw its average daily currency spot trading volumes increase 7% to $ 92.7 billion in March from a year earlier. Trade in fixed income products increased further.

Reporting by Tommy Wilkes; Editing by Toby Chopra

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