JPMorgan’s Head of Currency Trading Sees Trump Boosting Volumes

Donald Trump’s return to the White House is fueling a rise in currency trading volumes, according to JPMorgan Chase & Co., which sees his trade policies increasing attention on foreign-exchange markets. 

Stephen Jefferies, head of currencies and emerging markets trading at the US bank, said volumes handled by his team of 260 traders globally have been elevated since the US presidential election, and he anticipates a bustling year ahead.

“Talking about changing the dynamics of global trade, FX is obviously 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.”

Trump’s pledges to cut taxes and enact high trade tariffs have been a major driver for assets worldwide and are expected to keep dictating flows next year when he takes office. His policies could increase the divergence between the US and other major economies, influencing the path for interest rates and opening room for big market moves.

Hedge funds are already scooping up options contacts that pay out if currency swings increase, while strategists have dramatically revised their forecasts. Profits are seen picking up for Wall Street’s currency trading desks, with analytics firm Coalition Greenwich forecasting two consecutive years of Group-of-10 FX revenue growth — a turnaround from months of relatively staid market conditions.

At JPMorgan, Jefferies is confident his trading team is prepared for the increase in flow a more buoyant market may 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.”

Jefferies has also been closely monitoring the growth of algo-driven systematic funds in the market. Tracking their buy and sell patterns has become key to anticipating future exchange-rate moves, he said.

“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.”

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