It seems that the Forex market is reaching new levels of trading. Figures released today indicate that an average daily turnover volume in April exceeded the $4 trillion mark. London, the main center of foreign exchange, accounted for a third of all trading, saw a 15% half-year increase in average daily turnover to $1.75 trillion in April and a 31% gain from April 2009. Based on those Bank of England estimates and others from central banks in New York, Tokyo, Toronto and Sydney, HSBC calculated that overall global foreign exchange turnover averaged $4.1 trillion a day in April.

These numbers are not “official”, something that will be determined by the Bank of International Settlements’ later in the year, but if the HSBC’s extrapolation is correct, it will show 28% growth from $3.2 trillion in April 2007. There are some interesting trends emerging, with currencies like the AUD and the NZD showing a massive volume increase -  54% year over year jump in Australia’s average daily turnover. At $294.1 billion, Australian trading was two thirds the daily volume reported in Tokyo. But the Australian economy is one fifth the size of Japan’s.

One does not have to wait for any official figures to notice how much more important these currencies have become. Here is a table from just one Forex broker, showing volumes going through that particular platform on Monday. The AUD-USD was seemingly more active than the GBP-USD and USD-CHF and almost on par with the USD-JPY. The Kiwi is not far behind. A nice development from a trader’s perspective – increased volume means lower spreads. The AUD-USD, for example, can be routinely traded with 2 pips spread or less.

After my week long trading hiatus, I have not gone through full chart analysis yet. It will take me a couple of days for everything to sink in. But there are some price developments which are worth following, for possible trade set ups. Should they happen, my transaction sizes will be small, to allow for “breaking in”, of sorts.

It has been a while since the EUR-CAD was last discussed here, but this hourly chart looks interesting. After a sell off to 1.3260, the price bounced sharply to 1.3500. These two price extremes define a fairly wide congestion zone. For the next day one could expect for this zone to hold, so reversal trades at those levels might be appropriate. Eventually, though a breakout will happen, moving perhaps as much as 150 pips either way. The longer the current consolidation lasts, the higher the probability that the market will resume previous trend – down.

Do not even recall when a trade in USD-JPY was last covered here. Dollar-Yen gets a mention on these pages from time to time, but my trading in it is rare.  Why? It simply does not move as much as the other JPY pairs, so they present better opportunities. Today, however, this slow movement is a quality I look for, hence this chart. Dollar is under pressure, and the USD-JPY is drifting lower. Chances are good for a retest 0f 86.30 support. Sell point is at 86.70, with objective of 86.40, seeking only 30 pips. That is IF the move happens. Time will show.

Mike K.