Institutional foreign exchange trading volumes climbed to their highest levels in three months during October, with major platforms recording double-digit percentage gains as currency markets navigated a Federal Reserve rate cut, a prolonged U.S. government shutdown, and elevated dollar volatility ahead of the presidential election.
FX Trading Explodes as Fed Cuts and Dollar Swings Wildly
Cboe FX led the surge with total volumes reaching $1.19 trillion and average daily volume of $51.8 billion across 23 trading sessions, representing a 10.2% increase from September. The Chicago-based venue capitalized on heightened activity in major currency pairs as traders positioned for the Fed's October 29 decision to lower rates by 25 basis points to the 3.75-4.00% range.
The U.S. Dollar Index fluctuated sharply throughout October, initially weakening as the government shutdown entered its fourth week and delayed critical economic data releases.
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The dollar later recovered to close near 99.00 as safe-haven demand emerged from political instability in France and Japan, while the Fed's more cautious tone on future cuts provided support despite the rate reduction.
In the meantime, the Bank for International Settlements published its triennial survey, which showed that global FX volumes rose to record levels, reaching $9.6 trillion per day.
Tokyo Platform Posts Strongest Growth Since Spring
Tokyo Financial Exchange 's Click365 platform recorded its most robust performance in months, with volumes jumping 39.9% to 1.99 million contracts and average daily volume reaching 86,575 contracts. The sharp reversal marked a dramatic turnaround from the summer doldrums that had plagued Japanese institutional activity.
USD/JPY volumes climbed 32.5% month-over-month to 605,222 contracts as the pair tested key technical levels around 150 yen per dollar. Japanese retail traders showed renewed appetite for carry trades, particularly in higher-yielding emerging market currencies that offered substantial premiums over near-zero Japanese rates.
The year-over-year comparison showed continued improvement, with total volumes up 16.7% from October 2024 levels, suggesting Japanese institutional appetite may be stabilizing after months of weakness.
European Venues Show Divergent Performance
Deutsche Börse's 360T platform posted total volumes of $780.9 billion with average daily volume of $34.0 billion, representing roughly a 2% decline from September's activity. The German venue faced headwinds from narrowing interest rate differentials between the European Central Bank and Federal Reserve that reduced hedging opportunities.
Euronext FX recorded volumes of $564.1 billion with average daily volume of $24.7 billion, up about 6% from the prior month as European institutional traders navigated political uncertainty in France following the country's sovereign credit downgrade by Standard & Poor's. The euro traded in a wide range against the dollar through October before settling around $1.1560.
FXSpotstream continued its steady climb with total volumes reaching $129.6 billion and average daily volume hitting $85.9 billion, marking a 3.5% monthly increase. Spot volumes rose to $85.9 billion while other products reached $43.8 billion, reflecting continued institutional preference for direct currency exposure over derivatives as volatility picked up.
