Institutional
foreign exchange volumes bounced back in September 2025, climbing roughly
12% across major platforms as currency markets digested the Federal
Reserve’s first rate cut in nine months and the dollar found a floor after months
of decline.
The U.S.
Dollar Index steadied around 97-98 throughout September after
dropping 10.1% year-to-date through mid-month, marking its steepest
annual decline since 1990.
The Fed’s
25 basis point cut on September 17 brought rates to the 4.00-4.25% range,
but the move did little to revive the dollar’s fortunes as traders
focused on labor market weakness and persistent inflation above target.
Cboe FX
posted total volumes of $1.08 trillion in September with average daily
volume reaching $49.1 billion across 22 trading days. The
numbers represented a 12.4% monthly increase and brought the
platform back above the trillion-dollar threshold for the first time since
July.
The
September rebound followed two consecutive months of softer activity and
came despite continued uncertainty about Federal Reserve independence and
the sustainability of monetary easing amid political pressures
from the White House.
Daily
trading patterns reflected the market’s reaction to the Fed’s
September 17 decision, which was unanimous except for newly appointed
Governor Stephen Miran, who voted for a larger half-point cut. Powell
characterized the move as a “risk management cut” to prevent further
labor market deterioration rather than the start of aggressive easing.
In the
meantime, the Bank for International Settlements published
its triennial survey, which showed that global FX volumes rose to record
levels, reaching $9.6 trillion per day.
Japanese Volumes
Snap Losing Streak
Tokyo Financial
Exchange ‘s Click365 platform posted its first monthly increase
since summer, with volumes climbing 19.6% to 1.42 million contracts
and average daily volume reaching 64,689 contracts. The rebound broke a
string of declines that had pushed the platform to its lowest
levels in over a year.
USD/JPY
trading drove much of the recovery, with volumes surging 26.8%
month-over-month as the pair hovered near the 150 level that had
previously triggered Japanese intervention. TRY/JPY volumes jumped 39.9% as
traders positioned for diverging monetary policies between the
Bank of Japan and central banks in emerging markets.
The
year-over-year comparison remained challenging, with total volumes still
down 26.6% from
September 2024 levels, highlighting the persistent weakness in
Japanese institutional appetite that has characterized much of 2025.
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European
Platforms Hold Steady
Deutsche
Börse’s 360T platform recorded total volumes
of $767.5 billion with average daily volume of $34.9 billion, representing
a modest 12% increase from August’s softer performance. The
European venue benefited from continued euro strength, which climbed
to $1.19 in early September before settling back toward
$1.17 by month-end.
Euronext FX
posted volumes of $510.5 billion with average daily volume of $23.2 billion,
maintaining relatively stable activity levels despite broader
market turbulence. European institutional traders continued to find
opportunities in currency hedging and cross-border flows as the euro
consolidated gains that had taken it up roughly 12% against the
dollar year-to-date.
The ECB’s
decision to hold rates steady while the Fed cut provided a brief tailwind
for euro positioning, though momentum stalled as traders questioned whether the
dollar’s decline had run its course or represented a temporary pause in a longer
structural adjustment.
Fed Policy Drives Market
Dynamics
September’s
currency movements reflected the tension between deteriorating U.S. labor
market data and inflation that remained stubbornly above the Fed’s 2%
target. Nonfarm payrolls rose by just 22,000 in August while the
unemployment rate climbed to 4.3%, a four-year high that strengthened
the case for rate cuts.
“Labor
market weakness could soon outweigh concerns about inflation,”
Powell had signaled at Jackson Hole in late August, setting up
the September move. But inflation data complicated the picture, with
August CPI at 2.9% year-over-year and core inflation running at 3.1%,
leaving little room for rapid easing.
The Fed’s
updated economic projections called for another 50 basis points
in cuts by year-end and a quarter point in 2026, slightly more
aggressive than markets had priced in. GDP growth forecasts were revised
higher for 2025 to 1.6% from 1.4%, while PCE inflation expectations
for 2026 were raised to 2.6% from 2.4%.
Institutional
foreign exchange volumes bounced back in September 2025, climbing roughly
12% across major platforms as currency markets digested the Federal
Reserve’s first rate cut in nine months and the dollar found a floor after months
of decline.
The U.S.
Dollar Index steadied around 97-98 throughout September after
dropping 10.1% year-to-date through mid-month, marking its steepest
annual decline since 1990.
The Fed’s
25 basis point cut on September 17 brought rates to the 4.00-4.25% range,
but the move did little to revive the dollar’s fortunes as traders
focused on labor market weakness and persistent inflation above target.
Cboe FX
posted total volumes of $1.08 trillion in September with average daily
volume reaching $49.1 billion across 22 trading days. The
numbers represented a 12.4% monthly increase and brought the
platform back above the trillion-dollar threshold for the first time since
July.
The
September rebound followed two consecutive months of softer activity and
came despite continued uncertainty about Federal Reserve independence and
the sustainability of monetary easing amid political pressures
from the White House.
Daily
trading patterns reflected the market’s reaction to the Fed’s
September 17 decision, which was unanimous except for newly appointed
Governor Stephen Miran, who voted for a larger half-point cut. Powell
characterized the move as a “risk management cut” to prevent further
labor market deterioration rather than the start of aggressive easing.
In the
meantime, the Bank for International Settlements published
its triennial survey, which showed that global FX volumes rose to record
levels, reaching $9.6 trillion per day.
Japanese Volumes
Snap Losing Streak
Tokyo Financial
Exchange ‘s Click365 platform posted its first monthly increase
since summer, with volumes climbing 19.6% to 1.42 million contracts
and average daily volume reaching 64,689 contracts. The rebound broke a
string of declines that had pushed the platform to its lowest
levels in over a year.
USD/JPY
trading drove much of the recovery, with volumes surging 26.8%
month-over-month as the pair hovered near the 150 level that had
previously triggered Japanese intervention. TRY/JPY volumes jumped 39.9% as
traders positioned for diverging monetary policies between the
Bank of Japan and central banks in emerging markets.
The
year-over-year comparison remained challenging, with total volumes still
down 26.6% from
September 2024 levels, highlighting the persistent weakness in
Japanese institutional appetite that has characterized much of 2025.
You may also like:
European
Platforms Hold Steady
Deutsche
Börse’s 360T platform recorded total volumes
of $767.5 billion with average daily volume of $34.9 billion, representing
a modest 12% increase from August’s softer performance. The
European venue benefited from continued euro strength, which climbed
to $1.19 in early September before settling back toward
$1.17 by month-end.
Euronext FX
posted volumes of $510.5 billion with average daily volume of $23.2 billion,
maintaining relatively stable activity levels despite broader
market turbulence. European institutional traders continued to find
opportunities in currency hedging and cross-border flows as the euro
consolidated gains that had taken it up roughly 12% against the
dollar year-to-date.
The ECB’s
decision to hold rates steady while the Fed cut provided a brief tailwind
for euro positioning, though momentum stalled as traders questioned whether the
dollar’s decline had run its course or represented a temporary pause in a longer
structural adjustment.
Fed Policy Drives Market
Dynamics
September’s
currency movements reflected the tension between deteriorating U.S. labor
market data and inflation that remained stubbornly above the Fed’s 2%
target. Nonfarm payrolls rose by just 22,000 in August while the
unemployment rate climbed to 4.3%, a four-year high that strengthened
the case for rate cuts.
“Labor
market weakness could soon outweigh concerns about inflation,”
Powell had signaled at Jackson Hole in late August, setting up
the September move. But inflation data complicated the picture, with
August CPI at 2.9% year-over-year and core inflation running at 3.1%,
leaving little room for rapid easing.
The Fed’s
updated economic projections called for another 50 basis points
in cuts by year-end and a quarter point in 2026, slightly more
aggressive than markets had priced in. GDP growth forecasts were revised
higher for 2025 to 1.6% from 1.4%, while PCE inflation expectations
for 2026 were raised to 2.6% from 2.4%.
