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Global Foreign Exchange Market Activity Surges: CLS

CLS Group trade in FX

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CLS has reported a surge in activity in global foreign exchange markets in February 2020, a development that appears linked to the increase in market turmoil triggered by the global spread of the coronavirus pandemic.

CLS - an FX settlement services provider - reported average daily traded volumes in February 2020 were at $1.81 trillion, representing growth of 5% compared to February 2019.

Over the same period, FX swap volumes were flat but the spot market was up sharply at 24%, while there was a decrease in forward volumes of 9%.

CLS is a specialist provider of settlement services to its members in the foreign exchange market. It settles $5.5 trillion of payments on an average day for 70 of the world's most important institutions and more than 25 000 third parties.

"Coronavirus was the dominant theme driving markets in February 2020, which coincided with record daily averages in USDKRW of USD24 billion, USDSGD of USD44 billion and USDILS of USD7 billion," says CLS’s Head of Information Services, Masami Johnstone.

Preliminary data suggests that FX market activity in March has surged, in line with the spike in market volatility seen across all global financial assets.

CLS reports the high average daily traded volumes observed at the end of February, particularly $2.30 trillion during the last week of February, have continued well into March with average daily traded volumes of USD2.30 trillion, up almost 27% compared to February 2020 as a whole.

This was a rise of 55% in spot, 15% in FX swaps and 36% in forwards.

"This was against the backdrop of the increased market volatility. The spread of the Coronavirus globally led to significant losses in global stock markets," says Johnstone. "The US 10-year treasury bond fell below 1.00% for the first time in its history on the back of a surprise Federal Reserve 50 basis point rate cut."

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