Donald Trump’s return to the White House, according to JPMorgan Chase & Co. for an increase in currency trading volumes, seeing his trade policies increase attention on the currency markets.
Stephen Jefferies, head of foreign exchange and emerging markets trading at the US bank, said volumes handled by his team of 260 traders worldwide have increased since the US presidential election, and he expects a busy year ahead.
“Speaking of changing the dynamics of global trade, currencies are clearly one of the key pressure points,” Jefferies said in an interview. “If you have an intense interest in FX markets, you will get big volumes.”
Trump’s promises to cut taxes and impose high trade tariffs have been a major asset driver globally and are expected to continue to dictate money flows next year when he comes to power. His policies could widen the gap between the US and other major economies, impacting the interest rate path and creating room for major market moves.
Hedge funds are already making options calls that pay out if currency swings increase, while strategists have dramatically revised their forecasts. Profits for Wall Street’s currency trading desks are seen to be rising, with analytics firm Coalition Greenwich forecasting two consecutive years of group-of-10 FX revenue growth – a turnaround after months of relatively stable market conditions.
At JPMorgan, Jefferies is confident its trading team is prepared for the increase in flow that a more vibrant market can bring.
“Many FX agencies have downsized in recent years,” he said. “We have remained consistent in our workforce compared to competing companies, so we have sufficient staff to handle this.”
Jefferies has also been closely monitoring the growth of algorithm-driven systematic funds in the market. Monitoring their buying and selling patterns has become key to anticipating future exchange rate movements, he said.
“Systematic funds have transformed the market dramatically over the past five years,” he added. “The flows are persistent and their size is becoming significant.”
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