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Spot FX volumes soften following strong August turnover

Spot FX volumes soften following strong August turnover

(9 October 2019 – Global) Spot FX volumes declined at the end of Q3 following a bumper month in August according to platforms that publish monthly volumes. 

Many centres also saw September volumes drop year-on-year as volatility in FX markets remained subdued. Month-on-month average daily volumes declined by nine percent across all platforms in September with Integral the only venue to experience an increase in trading activity during the month. The figures follow the Bank for International Settlement’s (BIS) latest triennial survey results indicating a sharp lift in turnover, particularly for Swaps and derivative hedging products.

BIS research confirms that the US dollar has retained its status as the world’s reserve currency, present for 88 percent of all FX execution and featuring prominently as part of commodity markets. The Euro is the second most traded currency (32 percent) ahead of the ‘safe haven’ Japanese Yen (JPY) which saw its daily activity fall sharply from 21.6 percent to 16.8 percent. An aggregate total of emerging markets currencies ranked fourth while the Chinese Renminbi (RMB) remains the eighth most traded currency with a 4.3 percent share, only marginally higher from 2016 and paired with the US dollar for nine out of ten transactions.

East & Partners proprietary Australian Business FX turnover analysis indicates growth is driven ‘bottom-up’ by small businesses in particular, recording annualised growth of eight percent. In contrast, the Lower Corporate segment increased turnover by only three percent while the Upper Corporate & Institutional segment contracted by 0.6 percent. Total daily average Business FX volumes for H1 2019 have recovered by seven percent to reach A$6.179 billion following a slight dip in H2 2018 to A$5.773 billion according to official Reserve Bank of Australia (RBA) data collected biannually in April and October. Current average daily FX turnover across Spot FX, Forwards and Swaps for all currencies matches the H1 2018 daily average volume mark of A$6.018 billion.

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