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Foreign Exchange

Retail FX volumes hit highest level of the year

Retail FX volumes last month hit their highest levels since October 2011, as the resurfacing of tensions in the eurozone brought individual investors back to the currency markets, according to LeapRate, the online forex analysis firm.

LeapRate’s Retail FX Volume Index estimated average daily trading volumes in the sector rose 10.5% in May to $190 billion from $172 billion in April. That reflected the bounce back reported in the institutional FX sector, as the deadlock in Greece’s first general election knocked EURUSD off the tight range that had prevailed for the first few months of the year.

That pick-up in activity and volatility came as EURUSD fell from $1.32 at the beginning of May to $1.23 by the start of June.

 LeapRate average daily FX volumes (billion)

 
 Source: LeapRate

LeapRate, given the opaque nature of the retail FX market, calculates its index using its own proprietary formulas. The data input for the index includes activity levels put out periodically by various FX retail brokers and retail aggregators, as well as anecdotal evidence.

“May saw forex traders awaken from a deep six-month slumber, as excitement returned to the currency markets with higher volatility,” says Gerald Segal, managing director at LeapRate.

He says, anecdotally, he continues to see most of the volume growth in emerging markets, with some of the busiest desks at FX firms being those that serve Asia-Pacific markets.

“We have also seen a surge in trading from Turkey, with the Turkish-language customer-service desk at some firms being among the fastest growing and busiest,” he adds.

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