The Financial Futures Association of Japan (FFAJ) has issued its monthly industry report for foreign exchange trading in the country. Over-the-counter (OTC) trading has rebounded substantially over the previous month with the figures rising over 12 per cent when compared to August to ¥313 quadrillion daily ($3.01 trillion).
Looking at on-exchange trading, the figures are much lower on a nominal basis with the number reaching 3.17 quadrillion daily ($30.5 billion), with the growth number reaching over 25 per cent on a monthly basis.
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During September the figures across the industry have been rebounding steadily with Japanese brokers reporting solid figures in early October. Looking at the pairs that have been traded most actively, the main rebound in activity stems from increased USD/JPY and EUR/JPY trading, which have grown 17 and 22 per cent respectively.
After driving growth numbers during the summer, GBP/JPY and GBP/USD have registered material declines in trading activity last month totaling 10 and 27 per cent respectively.
October trends are likely to remain buoyant in Japan as the Japanese yen has been experiencing some increase in volatility. The current Governor of the Bank of Japan, Haruhiko Kuroda is not likely to serve a second term, which is fueling speculation that the new appointee is likely to engage in more aggressive monetary easing in 2018.
That said, we are still quite some time away from the end of Kuroda’s term and any prospective moves in the Japanese yen are likely to be driven by near term fundamentals.