The Financial Futures Association of Japan (FFAJ) has reported its retail trading volumes for the month of June. The figures show a decline of 2.4 percent month-on-month. The over-the-counter (OTC) FX Margin Trading report, published monthly, concerns the total number of retail FX trading volumes in the Japanese industry.
The study encompasses data from 54 licensed retail FX brokers that are operating in Japan. With the exception of February, which saw a huge monthly increase in trading volumes, this year has been mainly negative, showing a declining to flat trend in trading volumes.
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The volume of open positions has also shown a slight decrease, which could be in line with the global trend of low volatility, especially in dollar related pairs as all the attention has been focused on the pound and the euro over the last few months.
The ensuing low volatility across the industry has hit Japan particularly hard, as the most active pair for traders has been confined within a trading range. Usually ranging markets present lesser opportunities for traders and hence deliver lower trading volumes.
The UK elections and the possibility of QE tapering from the ECB have ensured that some of the focus is set onto the European region, as far as volatility is concerned.
What should encourage traders and brokers alike is the fact that the trading volume is now near all-time lows. Periods of low volatility are typically followed by periods of high volatility. Potential triggers include ongoing uncertainty from the Trump administration’s legislative push in Congress and the upcoming unwind of the Federal Reserve’s balance sheet.