FX Market is Slowing! Forex Trading Volume Shrinks
July 27, 2009
Unfortunately the forex market has not escape the impact of global deleveraging and the failure of Lehman Brothers in 2008. Central banks from around the world have released their semi-annual foreign exchange surveys and based upon all of the reports, forex trading volume decreased significantly between April 2008 and April 2009. Investors large and small have reduced risk with carry trades unwound aggressively. The lack of participation may explain why the major currency pairs have been stuck in a range since the beginning of May. In New York for example, forex spot trading volume fell to the lowest level in more than 3 years.
London remains the most active forex trading center followed by NY and Tokyo. The EUR/USD is still the most actively traded currency pair by far.
Here are some stats (all of data is in billions of U.S. dollars):
London (link to report)
- Britain is the world’s biggest FX trading hub with over a third of global turnover.
- Average daily turnover in forex products fell 20% since October 2008 to $1,356B, down 25% from April 2008
- Majority of decline was attributed to less activity in spot FX which fell 28%
- The most heavily traded currency pair was euro/dollar, which accounted for 32% of total turnover.
New York (link to report)
- Daily FX market turnover fell 26.3% to $527B, the lowest level since October 2005
- Spot transactions dropped 25.2%, Option trades fell 48.4%
Most Heavily Traded Currencies (Spot Transactions) in NY
Tokyo (link to report)
- Daily FX Market Turnover Fell 16 percent
Singapore (link to report)
- Daily Foreign Exchange turnover down 21 percent compared to October 2008
Canada (link to report)
- Daily Foreign Exchange turnover down 11.3 percent, lowest volume since April 2007
Posted in forex blog, forex volume
content rss
July 27th, 2009 at 10:49 am
Hi,
Base on chart above, we can see the unique of foreign exchange (FOREX) trading.
How big the market!
Cheers
Forex Automatic trading Robots
July 27th, 2009 at 11:12 am
Dear Kathy,
Looking at the data dont you thing AUD/USD must replace USD/CHF as the top 4 major currency?
July 27th, 2009 at 11:39 am
[...] Travel Club offers their members some of the greatest savings and benefits in the industry. FX Market is Slowing! Forex Trading Volume Shrinks – kathylien.com 07/27/2009 Unfortunately the forex market has not escape the impact of global [...]
July 27th, 2009 at 3:22 pm
As always Kathy a very interesting article.
Even allowing for the large drop in figures traded on FX, it just proves the point that it still remains the most fluid market out there available to traders. The past months have been “infamous” and will long be remembered many years from now. I don’t think any of us FX traders (at whatever level we participate) should push any panic buttons, just be aware of the problems that surround and act accordingly.
Your work is outstanding by the way.
July 27th, 2009 at 4:47 pm
This is potentially ominous news as it indicates that more institutions are sticking to the sidelines by staying in cash. In other words, they don’t trust green shoots.
Still, last Friday’s Commitment of Traders data showed 12 month high net short Dollar and 12 month high net long Aussie. Whenever a trade becomes too crowded on one side, the potential for a reversal increases dramatically.
July 28th, 2009 at 9:36 am
[...] talk in the markets of late about a big drop off in trading volume in the forex market (Bloomberg, Kathy Lien). What’s interesting is that while global volume is down, trading volume in the retail forex [...]
July 28th, 2009 at 2:43 pm
Hmm.. it is surprising to see GBP/JPY there at only 1%. Kathy, can you comment on that ?
July 29th, 2009 at 11:32 am
I am sure GBP/JPY is more actively traded in Tokyo but they do not clearly provide these details in their report.
July 29th, 2009 at 11:00 pm
Only some pairs are trending at present (i.e. USD/ZAR, AUD/CAD, USD/PLN), the rest are stuck in consolidations which, as I said months ago, is very good for those who like to trade consolidation patterns. Otherwise, I can’t be bothered. Light crude dropped from 69 to 62 dolars just in three days, there is plenty of room for traders.
July 30th, 2009 at 7:39 am
[...] Interesantes los datos que pone en su blog Kathy Lien acerca de la evolución del volumen en el mercado Forex. [...]
August 5th, 2009 at 12:58 am
I think signal the global shift towards a global currency. I think we are seeing a result of the web and the globalized and democratized access to information. Forex came into existence when Nixon took us off the gold standard. While it maybe a long way a way, or may never happen, this is definitely a sign of a invevitable shift toward a global currency. What will happen to the FOREX market? Will we trade the currencies of emerging nations with more vigor? I think this is the future of FOREX.
August 8th, 2009 at 8:12 pm
I have heard people trying to push real estate/stock market investments towards forex as though it would not be as affected by the current economic trends. This report solidified my belief that forex will be affected just as much as the other markets. Average volumes will grow again as investors gain more confidence in the economy as a whole. Thanks for the input by the way.
September 17th, 2009 at 4:57 pm
[...] Investment Group).Apparently the FX market is slowing down as Forex trading volume shrinks (Kathy Lien).When breaking the S&P 500 into 10 deciles (10 groups of 50 stocks), the two deciles with the [...]
December 26th, 2009 at 11:15 pm
Totaly agree , Ive been making a full time living from Forex for 5 years now , I make more in a month then i use to in a year now
December 29th, 2009 at 5:19 am
Frankly speaking, I’m using mostly EUR/USD and GBP/JPY for trading myself. And that’s just because I can make somehow normal analysis on that currency pairs.