Currencies Replace Crypto at Forefront of Market Trading Chaos
The atmosphere at a conference of currency market professionals was markedly different from the previous few years: there was a buzz.
Senior executives from banks and brokers were feeling optimistic about the prospects of foreign-exchange trading at the recent gathering in Amsterdam. They've spent years eyeing the world of crypto with envy, as digital assets thrived in a highly volatile market, while traditional money remained dull.
Currencies are now at the forefront of the action. Rapidly climbing interest-rate risks around the world and increased geopolitical tensions are fueling a 30% surge in trading and historic moves, reviving an industry that spent the past decade struggling with stagnant volumes.
“FX as an asset class is really back this year,” said Russell LaScala, the global head of FX at Deutsche Bank AG, the world's largest currency player by market share. “I think last year a lot of macro hedge funds were trading different assets, including crypto.”
The notoriously wild swings in crypto markets have subsided this year, with the Bitcoin Volatility Index shedding more than 50% since a peak in May. By contrast, both Deutsche Bank's and JPMorgan Chase & Co.'s gauges of currency volatility are at the highest in a decade apart from a spike when the pandemic struck.
And the moves have been shocking: in Japan, authorities sold dollars to prop up the yen for the first time since 1998, while the euro sank below parity with the dollar to a 20-year low. In London, the world's top currency trading hub, the pound slid to an all-time low.
“Volatility is a bit like a London bus: there are either none to be found for love or money, or three arrive at the same time,” said Kit Juckes, global head of currency strategy
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