The Bank for International Settlements is preparing to initiate its triennial survey of the forex trading market. 54 central banks and more than 4,000 financial institutions are expected to cooperate with and contribute to the survey, scheduled for April and June of 2010.

This survey assumes a significance not shared by its predecessors. The twelve months immediately past witnessed a financial storm of the worst magnitude. No market fully escaped that impact, not even the super-liquid, ultra-deep forex trading market, and banking regulators and politicians of all stripes are eager to examine the detritus, either to correct mistakes which may have contributed to the storm’s severity, or doubtless to find some means of taxing them.

Some symptoms of that impact include:

Volumes surged. Below is the weekly chart for EUR/USD encompassing the financial crisis:

Note how volumes (as indicated by the vertical green lines along the bottom of the chart) rose steadily in the weeks preceding the Lehman collapse (marked by the vertical pink line) and surged after it. Banking pundits believe this to have been caused by investors preferring to hold U.S. dollars during the depths of the crisis. With this tendency fading, volumes are returning more toward normal, a hopeful sign of growing global stability.

Volatility soared. According to the VIX volatility index, it tripled, and only this summer has it resumed its usual levels, another sign of returning normality. Retail forex traders earn pips and profits on predictable volatility; however, it can cause nightmares for corporate transactions and national economies, which is why one hears so much from central bankers regarding “orderly foreign exchange rates.”

Spreads widened. At a time when dealing desks became scarcer and counterparty risk a real issue, wobbly international banks earned steady profits during the crisis by widening their spreads, particularly on corporate transactions. Spreads now show a normalising tendency, yet another good sign.

Event risks for the remainder of the forex trading week include:

Eurozone September PMIs, scheduled for release Wednesday, 23 September, 8:00 AM GMT (6:00 PM Canberra time). Markets predict manufacturing to improve to 49.7, still a contractionary level, but for services to pass the breakeven 50 and print 50.5. A downside surprise is not likely to faze EUR/USD’s bullish trend, although it could cause some rebalancing in EUR/GBP and subsequently GBP/USD. An upside surprise could weigh on USD and contribute to further carry trade bullishness for EUR and the commodity dollars of NZD, AUD, and CAD.

The U.S. FOMC rate decision, scheduled for Wednesday, 23 September, 6:15 PM GMT (Thursday, 24 September, 4:15 AM Canberra time). No one seriously predicts a rate increase from the current 0.0–0.25%; however, the wording of the statement shall be all-important. Again, good news is likely to weigh on USD and contribute to investor exodus into growth currencies.

New Zealand August trade balance, scheduled for release Thursday, 24 September, 10:45 PM GMT (Friday, 25 September, 8:45 AM Canberra time). Markets expect a deficit of NZ$329 million, although after the 2Q2009 current account balance printed its first surplus since 1Q2003, this could outperform. Only an absolutely bomb, however, is likely to inhibit NZD/USD or AUD/NZD from further NZD strength.