March FX Spot Volumes Offer Glimmer of Hope, but Challenges Remain

Monday, 01/04/2024 | 06:39 GMT by Damian Chmiel

Trading volumes rise across major FX platforms, reversing February's negative trend.

However, activity in the foreign exchange space remains limited compared to last year.

March brought a much-needed respite for major FX trading centers as average daily volumes (ADV) rebounded from February's disappointing figures. The recovery was most pronounced in Asia, with the Tokyo Financial Exchange's Click 365 platform leading the charge. Europe and the US saw improved performance, though volumes remained below January's levels.

Asia Sees Strong Gains in March FX Volumes

The Tokyo Financial Exchange 's Click 365 platform reported a trading volume of 1,929,621 contracts in March, with an ADV of 91,888 contracts. This marks a significant improvement from February's figures and reverses the negative trend seen in recent months.

The strong performance in Tokyo suggested that market sentiment is improving in Asia, with investors regaining confidence after a period of uncertainty.

However, compared to the results of March 2023, Click365 still experienced a very sharp decline in trading activity. This contracted by more than 40% over 12 months.

US and Europe Post Modest Gains

In the US, Cboe FX reported a total volume of $966.7 billion in March, with an ADV of $46 billion. While this represents a modest improvement from February's figures, it still falls short of the levels seen in January.

Similarly, 360T reported a total volume of $613.4 billion in Europe, with an ADV of $30.7 billion. This marks a slight improvement from February but remains below the platform's performance in early 2024.

Euronext FX, another major European platform, reported a total volume of $539.2 billion, with an ADV of $25.7 billion. It was a visible rebound from $495.8 billion reported a month ago, yet a lower value than $576 billion from January 2024.

Outlook Remains Cautious

Despite the rebound in March, the outlook for institutional spot FX volumes remains cautious. While the worst of the recent downturn may be over, it remains to be seen whether the recovery will be sustained in the coming months.

Analysts point to ongoing geopolitical tensions and economic uncertainty as potential headwinds for the FX market. However, the strong performance in Asia suggested there may be pockets of opportunity for investors willing to take on additional risk.

For instance, the trading volumes of MarketAxess, the electronic trading platform for fixed-income securities, reported a total credit ADV of $15.2 billion, reaching record-breaking values.

Asia Sees Strong Gains in March FX Volumes

The strong performance in Tokyo suggested that market sentiment is improving in Asia, with investors regaining confidence after a period of uncertainty.

However, compared to the results of March 2023, Click365 still experienced a very sharp decline in trading activity. This contracted by more than 40% over 12 months.