By James Ramage, Katie Martin and Josie Cox
Foreign-exchange trading volumes in the U.S. plunged almost 20%
in April from one year earlier, according to data published Monday
from the Federal Reserve Bank of New York, as steady interest rates
and low volatility discouraged investors from making bets.
Average daily volume fell to $811.1 billion in April from $1.007
trillion one year earlier. Daily trading fell 0.6% from October
2013, at $816.3 billion. In the U.K., the biggest currency trading
hub, volumes averaged $2.4 trillion a day in April, down 6% from a
year earlier but up 7% from October, the Bank of England said.
Foreign-exchange industry insiders report drab conditions in the
once vibrant currencies market. Most major currencies have traded
in narrow ranges for much of the year as investors wait for greater
clarity on when the Federal Reserve will raise interest rates.
Central banks in the U.S., Europe and Japan have set rates near
zero for years, reducing the opportunities to wager on one currency
rising or falling against another.
Citigroup Inc., the world's largest currencies-dealing bank,
noted in its research Monday that "FX volatility has plummeted"
over the last six months, although the bank envisages a pickup from
here.
"With very little happening in the FX market, there is less flow
going through market makers," said Saeed Amen, founder of
quantitative analysis firm The Thalesians. Many strategists have
said that they don't expect markets to pick up until the monetary
policy in different major economies diverges markedly.
Dealer banks have already started feeling the strain from sleepy
market conditions. For the 10 largest global investment banks,
trading revenue in the fixed-income, currencies and commodities
units that comprise foreign-exchange trading plunged 15.7% in the
first three months of the year from the same period a year earlier,
according to data from research consultancy Coalition.
Write to James Ramage at james.ramage@wsj.com, Katie Martin at
katie.martin@wsj.com and Josie Cox at josie.cox@wsj.com