JPMorgan Chase & Co. claims that Donald Trump’s entry to the White House is driving up currency trading volumes because of his trade policies, which are drawing more attention to foreign exchange markets.
Head of currencies and emerging markets trading at the US bank Stephen Jefferies said he expects a busy year ahead and that volumes handled by his team of 260 traders worldwide had increased since the US presidential election.
“Talking about changing the dynamics of global trade, FX is one of the main pressure points,” Jefferies said in an interview. “When you have intense interest in FX markets, you’re going to get high volumes.”
When Trump takes office next year, his promises to lower taxes and impose high trade tariffs are likely to continue to influence asset movements globally. His policies have the potential to widen the gap between the US and other major economies, which would impact interest rate trends and create opportunities for significant market movements.
While strategists have drastically changed their predictions, hedge funds are already snatching up options contracts that pay off if currency swings escalate. Wall Street currency trading desk profits are expected to increase after months of comparatively muted market conditions. Coalition Greenwich, an analytics group, predicts two years in a straight Group-of-10 FX income growth.
Jefferies is certain that his trading team at JPMorgan is ready for the surge in flow that a more upbeat market would bring.
“A lot of FX desks have slimmed down in recent years,” he said. “We have stayed consistent in our headcount versus competitive firms so we’re well-staffed to handle it.”
Additionally, Jefferies has been keeping a careful eye on the market’s expansion of algo-driven systematic funds. According to him, observing their buying and selling trends has become essential to predicting future fluctuations in the exchange rate.
“Systematic funds have been dramatically transforming the market in the last five years,” he added. “The flows are persistent and their size is becoming significant.”
