Forex Trading Volumes Hit A Five-Month Low Despite The Dollar Surge

After years of struggling, the dollar finally started growing stronger, turning October 2024 into one of its best months in recent times, while at the same time, it was the weakest month for the EUR in over a year. However, despite above-average volatility caused by the upcoming US election and positive interest rate expectations, forex volumes failed to react.

FX Volumes Dropped In October

Spot foreign exchange volumes showed no increased activity from institutional investors despite the extremely positive month for the dollar, and in some cases, the volumes even hit a five-month low.

Reports of FX volumes hitting a new low came from multiple sources, such as Click 365 — a currency-trading platform on the Tokyo Financial Exchange (TFX). The platform recorded another month where FX volumes declined, going down 12% compared to September.

The decline was even greater on a year-over-year basis, showing that the volumes have slipped 17.5%. The average daily volume recorded on the platform was at 74,200 contracts.

Furthermore, data shows that the sharpest monthly decline was recorded in trading on the USD/JPY pair, which is typically very popular. In October, however, the pair saw depreciation reach 29.5%, and the trading volume dropped to 545,000 contracts.

An ADV depreciation was also clearly visible in the US market and spot currency trading on the Cboe exchange. Specifically, the indicator showed a decline from September’s $46.87 billion to October’s $42.8 billion, even though October had two more trading days than the previous month.

Because of this, the total volume was a bit higher, sitting at $984.9 billion. However, these are still the lowest figures since June. So far, the biggest gainer was August, bringing in a near-record $1.1 trillion.

Another report came from FXSpotStream, which shows a notable slowdown during October, with a total ADV reaching $93.1 billion. This was the lowest since May 2024, which saw spot ADV drop to $66.8 billion, which was also the lowest in almost six months.

Results From Europe Show Similar Declines

The situation was similar in Europe, where German stock exchange-owned 360T saw another month of consecutive volume decline which went from $661 billion in September to $657.7 billion. ADV sunk from $31.5 billion in September to October’s $28.6 billion, once again marking a consistent drop.

Interestingly, Euronext FX’s Fastmatch actually saw a slight rebound after having an unusually weak September. Total volumes went up from September’s $579 billion to October’s $602 billion, although the ADV performed worse, likely due to October’s 23 trading days compared to September’s 21.

Another interesting detail is that both Euronext FX and 360T saw an improvement compared to last year’s results. However, when it comes to the EUR/USD pair, it declined by 2.3% last month, which was its biggest drop since September 2023.