UK FX Volumes Drop in October But London Dominance Continues

London volumes showed the largest proportional rebound of the six regions surveyed.

Daily foreign exchange turnover averaged $2,611 billion in the UK during October 2018, lower four percent than the record high of $2,727 billion reported in April 2018, according to the Bank of England’s semi-annual turnover survey for the Foreign Exchange Joint Standing Committee.

London volumes showed the largest proportional rebound of the six regions surveyed, and were also the best second number in more than five years, specifically when turnover was recorded at $2,711 billion per day in October 2014.

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The survey showed that turnover in EUR/USD – the most liquid currency pair – dropped six percent to $728 billion per day during the reported period.

Meanwhile, USD/CNY turnover increased in the six months to October 2018, having yielded a record $73 billion per day even as the Australian dollar and Chinese yuan turnover rose 12 percent and 17 percent respectively.

The 28 largest banks active in the UK forex market participated in the survey, which showed that while most FX products saw a smaller decrease since the last survey. The drop in overall volumes was largely offset by a three percent increase in spot FX activity. While spot trades advanced for the third successive period to $775 billion, its best level since April 2015, FX swaps were down $157 billion to $1,241 billion, the steepest fall since October 2008 and 11 percent lower from six months ago.

Looking more closely at the UK data shows that FX options jumped to $155 billion, up from $134 billion the previous six-year period.

The survey also broke down volume by currency pair and showed that EUR/USD accounted for 27.9 percent of trading volumes, down from 28.5 percent in April 2018. This was followed by GBP/USD, which accounted for 12.4 percent of volumes, down from 12.9 percent in April’s survey.

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AUD/USD, the fourth most-traded currency pair in London, saw the biggest relative rise in trading activity, accounting for 5.1 percent of turnover, up from 4.4 percent recorded six months earlier.

Trading volumes for the Canadian dollar and Swiss franc – currencies both affected by their respective central bank’s neutral stances – were almost unchanged in the October survey.

Highlights on Global FX volumes

Elsewhere, the survey results confirm that London remains the world’s biggest currency trading hub, with daily turnover more than double that of its nearest rival, New York. However, the exact figures from the U.S. will be updated shortly as data from the October 2018 survey initially released today contained an error.

Similar semi-annual surveys were also conducted by the central banks of Canada, Singapore, Japan, and Australia.

The Foreign Exchange Market Committee reported an average daily volume of FX activity in Singapore was $508 billion in October, 3.0 percent less than in April 2018.

The Tokyo Foreign Exchange Market Committee (TFEMC) also reported that local foreign exchange activity amounted to $399 billion in October 2018, with foreign exchange swaps ($203.0 billion), spot ($133 billion) and outright forwards ($47.9 billion) accounting for the bulk of the turnover.

The report from the Australian Foreign Exchange Committee (AFXC), which operates under the sponsorship of the Reserve Bank of Australia (RBA), showed that average daily turnover was recorded at $114.4 billion in October 2018, slightly lower when compared with six months earlier.

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