Low Volatility + Vacation = Slow Summer for FX trading.
LeapRate's Retail FX Volume Index, sponsored by Leverate, fell by 5% in August to $167 billion per day from $175 billion in July. Note that July's figures were off 10.5% from $196 billion daily in June. August's figures represented the slowest month for FX trading in 2012 so far (see interactive chart below).
Both August and July saw volumes slow as the traditionally slow summer months combined with ultra-low volatility in both the currency and equity markets -- the bellwether EURUSD pair traded in a very tight 1.22-1.25 range for virtually the entire two-month period. And as usual, lower volatility brought with it lower trading volumes.
The good news, however, is that we expect September volumes to be significantly higher than both July and August, as volatility returned to the currency and commodity markets, with the EURUSD soaring to (briefly) cross the 1.31 level and both Gold and Oil prices yoyo-ing throughout the month.
LeapRate’s Retail FX Volume Index is a monthly measure of global trading activity in the retail FX sector.
Sources: LeapRate research, monthly and quarterly volume reports of various Forex ECNs and Forex brokerage firms.
Gerald Segal, LeapRate Managing Director commented, "The main casualty of August and July's slow markets was the institutional sector, which cut back its online trading tremendously (i.e. 25%-30%) as traders sat on their hands waiting for volatility to return. But return it has in September, and as such we expect September volumes to be back at healthy levels across the online trading universe."
The LeapRate Retail FX Volume Index, sponsored by Leverate, is a monthly measure of activity, stated in billions of dollars per day. It is calculated using proprietary formulas developed by LeapRate. The data input into the model are based on examining monthly and/or quarterly activity levels put out by various retail FX brokerage firms; similar activity levels announced by other FX aggregators such as Forex ECNs (e.g. ICAP, Thomson Reuters, FXall, Hotspot FX) and FX settlement firms (e.g. CLS Group); as well as anecdotal evidence we encounter as part of our general research activities in the Forex sector.
LeapRate is a leading research and information firm serving the global FX industry. Through its partnership with Dow Jones, LeapRate publishes the LeapRate-Dow Jones Forex Industry Report, a comprehensive review of the retail FX industry. Other LeapRate services include Best-of-the-Web FX Research and our daily FX Research email, the Forex Yellow Pages, Forex Exec Search job listings, and our Approved List of regulated FX brokerage firms worldwide. For more information please see our website at www.leaprate.com.