High Volume Does Not Guarantee a Tight FX Spread

Record foreign-exchange turnover does not guarantee that every trader receives a tight spread at every moment. The BIS found that global FX activity reached about $9.5 trillion a day in April 2025 and that liquidity remained resilient during tariff-driven volatility, but those are market-wide findings rather than a promise about one venue, pair or order size.

The distinction matters in 2026 because turnover figures are often used as shorthand for liquidity. High activity can support competitive pricing by giving dealers more opportunities to match flows. It can also reflect urgent hedging during a shock. If many participants need the same side of a trade, volume may rise while the price of immediacy increases.

The BIS analysis estimates that roughly $1.5 trillion of April 2025 activity was extraordinary and linked to tariff announcements and underhedged dollar exposures. Dealers' greater capacity to internalise customer trades helped the market absorb the flow. Bid-ask spreads and price impact stayed much more stable than during the onset of the pandemic.

Volume and liquidity answer different questions

A retail trader sees only a narrow slice of this structure. A major pair may display a small top-of-book spread while the available amount is insufficient for a large order. An emerging-market pair may show less activity but stable pricing for a modest ticket. The pair, venue, time and order size need to stay attached to any liquidity claim.

Applying the lesson to September

Oil above $100, a near seven-month low in USD/JPY and closely spaced ECB, Federal Reserve and BOJ decisions create reasons for turnover to rise. They also create one-sided risk. Before a release, measure the actual spread and executable size rather than assuming that a globally deep market will absorb the order at the displayed price.

This brings the argument back to the headline. Record turnover is evidence of a large, active market. A tight spread is evidence about the immediate quote. One cannot replace the other.

Forex Spreads 2026: Beyond the Lowest Bid discusses current retail execution themes. The video is lightly viewed and is used only as commentary; BIS research supplies the market-wide evidence.

Sources

• BIS: global FX markets when hedging takes centre stage
• BIS: non-visible trading and FX liquidity
• BIS: 2025 Triennial Survey release
• BIS on X

The final BIS analysis uses a rounded $9.5 trillion figure; the initial survey release reported $9.6 trillion. Both refer to April 2025.