Many traders decided to wait out the Republican – Democrat showdown, also lots of data missing.
LeapRate Exclusive…. LeapRate has learned from a number of forex industry executives, as well as those on the buy side, that trading volumes the past two weeks have been fairly muted during the US Government shutdown and the showdown between Republicans and Democrats, which was (temporarily) solved late Wednesday night.
The volume slowdown applied across the board, to forex, equities and debt, as well as other derivative instruments, and was seen mainly with institutional traders.
The reason for the volume drop-off? Two reasons, actually:
- General uncertainty as traders and investors (especially institutional ones) kept their money on the sidelines waiting out the Republican-Democrat war of words and a potential US debt default, and
- Delayed US data releases (see more detail below) during the shutdown.
Nobody likes uncertainty and many traders like to trade news events, after all the news flow is highly correlated to the order flow. FX volatility has been dropping since the beginning of the month, so in all probability we could be up for a pick-up in both metrics right away.
Uncertainty that caused institutional and retail investors to sit on the sidelines for a while has dissipated last night when we finally witnessed a congressional solution to the shutdown. With major data releases around the corner investors will most likely resume their hibernation and return to active trading.
It is possible that today we are going to see some ready reports released and a time schedule update for the raft of data that hasn’t been compiled yet. Below is a list of the US data points that have not been released since the start of the month:
- Oct 01 Aug Construction Spending, est +0.4%
- Oct 03 Aug Factory Orders, est +0.2%
- Oct 04 Sep Non-farm Payrolls, est +185k
- Oct 04 Sep Avg Hourly Earnings Yr/Yr, est +0.2%
- Oct 07 Sep Empl. Trends Index at 1000ET
- Oct 08 Aug Intl Trade & 08 Aug JOLTS
- Oct 10 Sep Import Price Index
- Oct 10 Sep UST statement
- Oct 11 Sep Retail & Food Sales, est flat/0.4%
- Oct 11 Sep Producer Price Index, est +0.2%/+0.1%
- Oct 11 Aug Business Inventories
- Oct 16 Sep Consumer Price Index, est +0.2%/+0.2%
- Oct 16 Aug Tsy Intl Capital System
Forex Industry Report