Weak yen not enough

Trading Volumes in Japan Continue Lower after a Buoyant Start to 2015

Another monthly decline in Japanese retail FX volumes for the month, spelling the summer lull is nearing for the market

Japanese foreign exchange brokers have reported that trading volumes for the month of May have declined another notch by about 8 percent to mark a second consecutive monthly decline. The total amount traded through online foreign exchange brokers in the country amounted to ¥424 trillion ($3.43 trillion).

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While the figure is impressive by all accounts, the margins on the Japanese market are much thinner when compared to the rest of the world. This is largely due to the competitive structure of the local retail FX market and tight regulations. Average spreads on the Japanese market are much tighter than that of a typical Western retail FX broker.

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Despite rallying to new highs, trading volumes in the Japanese yen’s major cross to the U.S. dollar have been the main reason for the decline. Monthly activity in the USD/JPY declined by 14 percent.

At the same time the British pound cross picked up steam after the surprise from the U.K. elections in the beginning of May triggered substantial volatility in the GBP/JPY pair. Trading in this particular product jumped by almost 23 percent.

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