NEW YORK/LONDON: Daily currency volumes in North America and the United Kingdom dropped in April from October 2019 and a year earlier, according to semi-annual surveys by the New York Federal Reserve's Foreign Exchange Committee and the Bank of England released on Monday.
Global central bank intervention that pushed interest rates to zero has reduced volatility and diminished FX trading activity since the last survey in October, analysts said.
The April survey covered the peak of the coronavirus-induced panic in March when liquidity shrank across most markets.
Daily FX volume in North America fell to $764.6 billion, down 14.0% from October, and 5.7% weaker than in April 2019.
Turnover in London, the world's biggest currency trading hub, declined 16% in the six months to April, led by a 30% slump in pound trading. Volume was down 15% from April 2019. UK currency volume hit a record high in October.
Spot transactions in North America, however, rose 1.8%, but all the other FX transactions declined.
All UK instruments fell from October, including spot transactions, outright forwards, non-deliverable forwards, foreign exchange swaps, currency swaps and foreign exchange options, the BOE said.
Average daily turnover tumbled for all major currency pairs in London over the period.
"Historically in FX, there are people who love the carry trade and interest rates differentials. But everyone seems to have raced to zero interest rates," said Ed Moya, senior market analyst at OANDA in New York.
Pound trading, which reached a record in October, was the worst hit, with average daily turnover for sterling/dollar down 32%, while euro-sterling turnover dropped 31%, the BoE survey showed. The largest decrease in North American volume occurred in sterling/dollar, while in terms of transaction value, the euro/dollar pair saw the biggest fall.
The largest increase in North American volume over the period was in the euro/Swiss franc pair.
Foreign exchange swaps and currency swaps in the UK had the largest relative falls, with daily turnover down 20% and 37% respectively. Spot transactions declined 10% to $677 billion in the six months to April, from $754 billion in the six months to October, the BoE report said.
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