Is it a summer slowdown or something else going on in the FX market? Following weak results for July from Hotspot FX, figures from the CME Group reveal that exchange-traded currency futures and options fell last month when compared to June’s trading.
For the month of July, total volumes of FX futures and options were 16,048,423 contracts. Average daily volumes (ADV) for July calculated to 697,758 contracts, 29.2% below June’s activity, but 25.5% above the same period last year. The ADV were the lowest figure reported at the CME for FX since August 2014. Overall, FX underperformed all of the CME Group’s product lines, with Interest Rates and Equity Index contracts also showing a decline in activity during June.
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As seen below, the drop in FX trading occurred across the board, with all major currencies experiencing a decline in volumes. Most notable was the fall in euro and yen contracts, of which total monthly volumes fell 33.2% and 36.8% respectively in July. The decline in the euro is notable, as the first part of July included Grexit speculation which had triggered volatility in the euro. However, the inability of the moves to have resulted in increasing volumes may be showing that due to the lack of clarity, traders and investors favored sitting on the sidelines instead of speculating on a Grexit outcome.
Among other individual currencies, it is worth noting that although showing a monthly decline, the Australian and Canadian dollar’s volumes outperformed other major currencies. This appears to be due to their connection to precious metals trading, of which gold traded to its lowest level since 2010.