FXCM Group has published its execution quality metrics for the month of March 2020 this Tuesday, with spreads for cryptocurrency and certain foreign exchange (forex) instruments being influenced by high levels of volatility.
The coronavirus pandemic has caused liquidity issues for a number of assets due to the higher levels of volatility, with gold, in particular, seeing a surge in demand, whilst also struggling with supply issues caused by the crisis.
During the month of March, the retail broker reported that the active trader average spread for XAU/USD was 15.7 pips and the active trader effective spread was 16.3 pips. This is significantly lower than the previous month, which posted spreads of 35.1 pips and 32.3 pips, respectively. It is also down on a yearly comparison, as the average spreads published in March of last year was 35.1 pips and 35.0 pips, respectively.
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As Finance Magnates reported, in March, liquidity providers, market makers, and exchanges struggled to accurately price the commodity, and some, in fact, even stopped pricing gold altogether for a time. At the same time, spreads widened considerably, and although things have returned closer to normal, the liquidity issues still remain.
For the cryptocurrency pairs, FXCM averaged 28.1 pips on BTC/USD, which is slightly up from the 25.7 pips average recorded during the previous month. When measuring the spreads achieved in the same month of the previous year, last month’s spreads are higher than the 25.7 pips average in March of 2019.
EUR/USD spreads increased 300% MoM on FXCM
The average spread for the EUR/USD, the most traded currency pair in the world, increased on both a monthly and yearly comparison for FXCM, coming in at 0.4 pips. Against February of 2020, this is higher by 300 per cent, up from 0.1 pips. It is also higher than the 0.2 pips noted in March of the previous year.