It seems that traders should move their analysis efforts away from the USD and concentrate more on cross rates in future. Activity in the "minors" last year increased considerably, and apparently this is continuing in 2014.
Some background here:
BIS
Triennial Central Bank Survey
[The latest survey
of turnover took place in April 2013]
Highlights of the 2013 survey
Trading in foreign
exchange mark ets averaged $5.3 trillion per day in April 2013. This is up from
$4.0 trillion in April 2010 and $3.3 trillion in April 2007. FX swaps were the
most actively traded instruments in April 2013, at $2.2 trillion per day,
followed by spot trading at $2.0 trillion.
The growth of
foreign exchange trading was driven by financial institutions other than
reporting dealers. The 2013 survey collected a finer sectoral breakdown of
these other
institutions for
the first time. Smaller banks (not participating in the survey as reporting
dealers) accounted for 24% of turnover, institutional investors such as pension
funds and insurance companies 11%, and hedge funds and proprietary trading
firms another 11%. Trading with non-financial customers, mainly corporations, contracted
between the 2010 and 2013 surveys, reducing their share of global turnover to
only 9%.
The US dollar
remained the dominant vehicle currency; it was on one side of 87% of all trades
in April 2013. The euro was the second most traded currency, but its share fell
to
33% in April 2013
from 39% in April 2010. The turnover of the Japanese yen increased
significantly between the 2010 and 2013 surveys. So too did that of several
emerging ma
rket currencies, and
the Mexican peso and Chinese renminbi entered the list of the top 10 most
traded currencies.
Turnover by currencies and
currency pairs
The
currency composition of global FX trading shifted notably between 2010 and
2013, not only among the world’s most actively traded currencies, but also
among important emerging market currencies. The Japanese yen stood out as the
major currency that saw the most substantial jump in trading activity, whereas
the role of the euro as an international currency declined over the period. The
Mexican peso and the Chinese renminbi saw the most significant rise in market
share among major emerging market currencies.
The
role of the US dollar as the world’s dominant vehicle currency remains
unchallenged. FX
deals
with the US dollar on one side of the transaction represented 87% of all deals
initiated in April 2013, about 2 percentage points higher than three years ago.
Among
the major currencies, trading in the Japanese yen jumped the most, rising by
63% since the 2010 survey. Turnover in the USD/JPY pair rose by about 70% in
this period. As a result, the yen significantly expanded its share in global FX
trading by 4 percentage points to 23% in 2013. Additional information from the
semiannual surveys by regional FX committees suggests that most of the rise in
yen trading occurred between October 2012 and April 2013, a period
characterised by expectations of a regime shift in Japanese monetary policy,
which then took place in April 2013.
The
international role of the euro, by contrast, has shrunk since the beginning of
the euro area
sovereign
debt crisis in 2010. With an increase of just 15%, trading of the euro expanded
by less than the overall market. The euro remains the second most important
currency worldwide, but its global market share decreased by almost 6 percentage
points to 33%, reaching the lowest value since the introduction of the common
currency.
Trading
in the most actively traded euro exchange rate crosses, such as EUR/JPY, EUR/GBP and EUR/CHF, expanded less
than that in their USD counterparts. Among the most actively traded advanced
economy currencies, the Australian and New Zealand dollars continued increasing
their share in global FX trading. By contrast, sterling, the Canadian dollar,
the Swedish krona and, most notably, the Swiss franc lost ground in global FX
trading in relative terms.
The
2013 Triennial Survey further shows a significant rise in the global importance
of several
major
emerging market currencies. Turnover in
the Mexican peso reached $135 billion in 2013, raising the peso’s share in global
FX trading to 2.5%. The Mexican peso has thus become part of the group of the
world’s 10 most actively traded currencies, ahead of well established
currencies such as NZD and SEK. The Russian rouble also saw a significant
increase in market share, making it the 12th most actively traded currency
worldwide.
The
role of the renminbi in global FX trading surged, in line with increased
efforts to
internationalise
the Chinese currency. Renminbi turnover soared from $34 billion to $120
billion. The renminbi has thus become the ninth most actively traded currency
in 2013, with a share of 2.2% in global FX volumes, mostly driven by a
significant expansion of offshore renminbi trading.
