Fastmatch trading volumes rebounded sharply in the first month of 2018. The FX trading venue of Euronext is reporting a total of $457 billion changed hands during the first month of the new year. The figure is the highest since May 2017.
The total monthly trading volume metric was higher by 28 percent when compared to January 2017 and by 46 percent when compared to December last year.
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Average daily trading volumes amounted to $20.8 billion, a figure which is higher by 22 percent year-on-year and by 33 percent month-on-month. The 25th of January represented the most volatile day for the forex market as comments from Treasury Secretary Mnuchin and the ECB’s Mario Draghi moved the US dollar materially against the euro.
While the market is looking for new catalysts, trading has subsided somewhat after the most-volatile day of the month. A spat between the EU and the US about the value of their currencies is the main driver for the market these days.
Looking ahead, the new Federal Reserve chairman, Jerome Powell, will take the helm at the US central bank on the 5th of February. Any shift in the rhetoric of the Fed is likely to trigger a new bout of volatility in the coming weeks and months. The next key risk metric in Europe is the Italian election in March, still some time away.
FX volatility in the first month of the year is kicking off on a promising note, however, if history is any guide, the sustainability of this rebound is debatable. Previous years saw a trend of pockets of volatility around material risk events.