CME Group's July FX Volumes Dive Lower, Despite Interest Rate Activity Surge

Upon announcing their Q2 results, the CME Group blamed historically low Volatility Volatility In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders In finance, volatility refers to the amount of change in the rate of a financial instrument, such as commodities, currencies, stocks, over a given time period. Essentially, volatility describes the nature of an instrument’s fluctuation; a highly volatile security equates to large fluctuations in price, and a low volatile security equates to timid fluctuations in price. Volatility is an important statistical indicator used by financial traders to assist them in developing trading systems. Traders Read this Term affecting their bottom line profit results as well as leading to flat year-over-year volumes. FX volumes were specifically lower compared to the same period in 2013 due to Q2 being an especially strong period for currencies.

In July, despite volatility remaining low, and the July 4th holiday which took place during the month and closed trading in most products, the CME reported gains in volumes. Overall trading of futures and options was 269,321,483 contracts, 12.7% above June’s results, and 4.3% higher on a daily average volume basis. Leading volumes higher were Interest Rate and Equity Index products, where debate among traders of whether the US Fed will in fact end its quantitative easing by the end of this year has led to an increase of speculative positions being taken.

Not participating in the increase in volumes was FX and metals trading. FX itself was the weakest unit at the CME with total monthly volumes falling 20.3% compared to June and 28.0% versus the same period last year. During July average daily volumes in dollar value was $71 billion. The decline in volumes showed once again the difficulty the FX market is having in 2014, with active periods of trading failing to have much carryover momentum. The July decline came as June trading had rebounded considerably from April and May. Among individual contracts, trading was lower across the board with British pound volumes falling 32.1% after previously surging higher in June. Of note, Mexican peso volumes led active contracts lower, with trading declining 40.2% compared to June.