Last month was one of the slowest volume months of the year for Forex…but data for December is showing a quick snap-back with plenty of events taking place in the last couple of weeks to finish the year strong for brokers and venues across the industry. It was widely reported on LeapRate the month of November was one of the slowest months of the year and in some cases the slowest since 2012.
Volumes have been trending down heading into year-end, but December is showing strong trading thus far. Will it carry into 2016?
Two institutional platforms in BATS Hotspot (reported lows not seen since December 2012) and Thomson Reuters (reporting lows not seen since November of 2012) recorded dips in volumes not seen for three years. 2015 has generally been a good year for FX volumes – all started off with the Swiss National Bank peg removal from the Euro…the Swiss franc fireworks of January carried over into the summer when the drama of Greece potentially leaving the Eurozone saw an elevated environment for Euro volumes.
While volumes have been trending down the last few months, December looks to be a boon if it holds up. Data showed last month BATS Hotspot with average daily volumes (ADV) for November 2015 of $22.38 billion, down 6.6% from the result recorded in a weak October. However, December’s first 2+ weeks at Hotspot have seen volumes explode to the upside clocking in for an ADV of $30.52 billion, good thus far for 36% higher then November. The question is will it hold up…we are now approaching Christmas week (where we are likely to see the Holiday drop-off until the new year begins).
Why has December perked up? This month started off with an ECB decision on policy, and this last week we witnessed the Federal Reserve increase the U.S. key interest rate 25 basis points, and finally Bank of Japan also unleashed new asset purchase policies causing much volatility. All of the central banking action in December has provided the juice necessary to see volumes get their boost as traders position and digest new policy directives surrounding the global economy.
Stay tuned to LeapRate as the trading year wraps up for 2015, with just 9 trading days left…