Foreign exchange trading boosted

Published: 30 Jan at 12 PM Tags: Euro,

Encouraging data linked to the financial state of the eurozone has seen more investors return to forex trading. So far this year the UK pound and the Swiss franc have been popular trades.

Euro short positions were closed by many investors following an announcement by the European Central Bank this month that it will be holding interest rates. Investors also expect the single currency to perform higher in the coming weeks as bankers predict more short-covering.

Investors have been enticed back to the forex market as the pound, yen and Swiss franc experience a decline. Throughout January major banks reported an increase in forex trading. Japanese yen trading has risen by 100 per cent according to UBS and Deutsche Bank said it was experiencing record levels of trading at the moment.

Barclays said it had not seen trading in foreign currency hit such a level since May 2010 when the crisis in the eurozone began. Low activity and a lack of volatility in 2012 meant that many banks were hit by falling revenues from their forex divisions.

However the ‘risk on, risk off’ attitude of traders, which made it difficult to turn a profit in the forex market, seems to have eased.