FX Turnover Falls Back in April

The latest FX turnover surveys from the major trading centres indicates that FX turnover in April 2023 likely declined from April 2022, but may be slightly higher from the previous survey, in October 2022. The results are provisional as the Tokyo FX Committee is yet to publish its data.

Looking at the six centres to publish data, it was very much a mixed bag, with only Australia and Canada seeing a year-on-year volume increase, while the UK, US, Singapore and Hong Kong all saw a decline. Taking out the Japanese results for April 2022, global turnover seems to have declined by 5.4%, which is not unexpected given the surge in activity in markets in the first quarter of 2022, largely driven by the Russian invasion of Ukraine.

On a six-monthly basis, from October 2022, turnover in UK increased by 8.5%, in the US it fell by 5.9%, in Singapore it was down 5.5%, and in Canada it was down 10.1%. Elsewhere, Hong Kong saw a strong increase of 9.4%, while Australia was also higher, by 3.1%.

In the UK, average daily volume (ADV) was $3.117 trillion, the second highest on record, with only the previous April beating it. Within this there were mixed results, however, with year-on-year spot ADV declining fractionally by 0.9% to $876.3 billion per day, and FX swaps – the largest segment by far in the UK FX market, falling 14.2% to $1.447 trillion per day. FX options also declined, by 3.4% to $164.5 billion per day.

Conversely in the UK, it was a stellar month for outright forwards and NDFs, the former rising almost 20% to $442.2 billion (easily the highest ADV on record), while NDFs grew at a more subdued 11.5% to $151.3 billion (again a new peak for the product).

Globally, spot ADV fell by 4.5%, while outright activity (including NDFs), grew by 4.8%, FX swap fell back 8% and FX options, worst performer across the surveys so far, fell 9.1%.

In the US, ADV was $918.4 billion across all products, a decline of 4% year-on-year. Within this, spot ADV was down 3.3% at $379.6 billion, outright forwards was down 7.1% at $184.6 billion (within this NDF ADV was down 7.6% at $46.7 billion), FX swaps ADV was $302.9 billion, a decline of 3%, and FX options activity was $51.2 billion, a 4.1% fall.

For the first time in more than 15 years there were declines in every product in Singapore, with overall ADV falling 10.8% to $810.6 billion. Spot ADV dropped by 23.7% to $184.3 billion, while outright forwards ADV was $118.1 billion, a decline of 16.4% (Singapore does not break out NDF activity). FX swaps, which has long been the driving engine of growth in the Singapore FX market, also declined on a year-on-year basis, albeit fractionally by 0.2% to $453.3 billion, as did FX options, by 29.9% to $45.5 billion per day. Currency swap turnover did actually increase in Singapore, by more than a third to $9.1 billion per day, but it remains at very low levels historically – over the last decade it has averaged over $50 billion.

Only FX options saved Hong Kong from reporting an across-the-board decline in April 2023, year-on-year ADV was up 6.8% to $20.3 billion per day. Overall ADV in Hong Kong was $647.3 billion, a 0.7% fall on a year-on-year basis. Spot ADV was fractionally lower, by 0.15% to 4134 billion, while outright forwards fell 10.9% to $66.5 billion and FX swaps by 0.3% to $422.6 billion.

Australia and Canada continue to swap positions in the global ladder, with Australia just climbing above its Commonwealth cousin in April 2023. Turnover was $152.3 billion in Australia in April 2023, a 1.3% increase year-on-year, while in Canada it was $149.1 billion, a 1.4% increase.

Spot ADV in Australia rose 7.2% to $36.8 billion in April 2023, while outright activity was flat at $24.9 billion and FX swaps rose very slightly, by 0.3% to $86.6 billion. FX options activity barely registered in Australia in April 2023, ADV was just $638 million per day, down almost 65% from the previous April.

In Canada, spot FX ADV was down 8.7% to $18.8 billion, in outrights it was up 17.8% to $19.2 billion – the first time outright activity has outstripped spot in Canada since reporting began – in FX swaps ADV was $111.1 billion, a rise of 5.1% and as was the case elsewhere, FX options saw a decline on almost 30% to $3.1 billion per day.

Again, with Tokyo still to report, across the centres, on a year-on-year basis, spot ADV fell by 4.5%, while outright activity (including NDFs), grew by 4.8%. It  was worse news for FX swaps, which fell back 8% and FX options, worst performer across the surveys so far, at -9.1%.