The coronavirus outbreak has negatively affected industries like air travel and hospitality. However, it had a surprising effect on the forex trading sector as the virus had accelerated the market’s growth. But what is the reason behind this sudden surge in foreign exchange trading activity? We will find out in this article along with the top forex trading trends for 2020.

Increased Market Volatility and Significant Surge in Forex Trading Activity

In addition to recording a daily turnover of $6.6 trillion earlier this year and a 40% increase in day-to-day trading volume compared to the past decade, the coronavirus further increased demand for forex solutions among consumers. In the past few years, the forex market was struggling with low market volatility, which made it hard for service providers to attract new users to their platforms. However, due to the coronavirus-fueled market turmoil, volatility has increased, providing new opportunities for forex trading to capitalize on. As a result, forex solutions have experienced a massive surge in forex trading activity. According to Finance Magnates, the average retail monthly forex and CFD volumes have increased by nearly 35% from Q1 2019 to the first quarter of 2020. And forex service providers have confirmed the same statement. Forex trading solution Euronext reported a 21% increase in spot forex trading revenue in Q2 2020 compared to last year's data.

Stocks Recover From March Crash, USD Weakens, Oil Price Remains Low

In addition to the rise in trading activity, there have been multiple events impacting the forex market. One of them is stock prices, which have experienced a massive crash in March. However, after surviving the fall, the S&P 500 has gradually recovered its losses, targeting new highs this year. On the other hand, the same couldn't be said about oil prices. Since Russia–Saudi Arabia oil price war, the commodity is still 30% down from the year's start. Also, due to the high number of infections, the USD's performance has been weak this year, losing nearly 7% of its value to the EUR since January 1, 2020.

Crypto Market Boom

Forex and CFD traders should also be aware of this year's cryptocurrency market boom. Despite their falling prices in March 2020, digital assets have quickly recovered their lost value, entering into a significant bull run, which has been going on in the past few months. While Bitcoin (BTC) recorded a 70% ROI this year, Ethereum (ETH) has achieved an even greater YTD growth, increasing its value over three times. The rising crypto market prices could be explained with surging demand for assets with low-to-zero correlation with general market instruments.

Sources:

Asian Banking & Finance - Global FX market daily turnover hits $6.6t in 2020

Elite CurrenSEA - Six Key Forex & CFD Trends in 2020

Refinitiv - COVID-19: What’s the impact on forex trading?

Finance Magnets - Did COVID-19 Save the Forex Industry?

Finance Feeds - Spot FX trading generates revenues of €6.6m for Euronext in Q2 2020

Trading View - CFDS ON CRUDE OIL (WTI)

Trading View - Euro / US Dollar

Trading View - S&P 500 Index

Trading View - Bitcoin / US Dollar

Trading View - Ethereum / US Dollar