Bank of Canada FX Survey: What It Means for Rates

Canada’s foreign exchange and derivatives markets just got a lot busier—and that’s not trivia for traders in suits. The Bank of Canada’s latest triennial survey shows average daily FX and OTC derivatives turnover in Canada rose to US$233 billion in April 2025, up from US$172 billion in 2022 (a 35% jump).

Here’s why you should care if you’re thinking about a mortgage renewal, trying to earn more on savings, or deciding whether to lock in a GIC: the plumbing of FX and interest rate derivatives is where big institutions manage risk, fund themselves, and transmit rate expectations into the real economy. When that plumbing changes, borrowing costs and investment pricing tend to move with it.

This post is part of our Interest Rates, Banking & Personal Finance series, where we translate market signals into practical decisions. I’ll walk through what the survey actually says, what it implies about interest rate expectations and market stability, and what you can do with that information heading into 2026.

What the Bank of Canada’s triennial survey really tells us

The survey is a snapshot of trading activity in April 2025 across foreign exchange (FX) and over-the-counter (OTC) derivatives in Canada. The Bank of Canada ran the Canadian portion as part of a coordinated global effort led by the BIS, with 11 active dealers in Canada participating.

The key point: this isn’t a forecast. It’s a measurement of turnover—how much is being traded, by instrument, counterparty type, currency, maturity, and execution method.

Turnover is a “stress test” for how active hedging and funding has become

When turnover rises sharply, it usually means some combination of:

• Higher volatility (more need to hedge)
• More issuance and refinancing (more need to swap/fix exposures)
• More cross-border activity (more FX conversion and hedging)
• Structural shifts in how institutions manage interest rate risk

You don’t need to trade a swap to be affected by it. If swap markets are active and liquid, banks can hedge their own risks more efficiently—which influences mortgage pricing, fixed-income yields, and the rates you’re offered.

The headline numbers: FX up 35%, rate-derivatives up 110%

The survey’s two biggest stats are straightforward and worth repeating because they’re the backbone of the story.

1. Average daily turnover in Canada: up from US$172B (2022) to US$233B (2025), a 35% increase.
2. Single-currency interest rate derivatives turnover: up from US$1.4T (2022) to US$3.0T (2025), a 110% increase.

That second number is the eye-opener. Interest rate derivatives activity more than doubled.

Why interest rate derivatives exploding is a “rates are still the main risk” signal

Even though Canada’s policy rate sat at 2¼% in December 2025, the last few years trained institutions to treat interest rate risk as a first-order problem. A lot of borrowers refinanced, a lot of portfolios got repositioned, and a lot of banks had to manage mismatches between:

• what they earn (loan and mortgage interest)
• what they pay (deposits, wholesale funding)
• and what happens when rate expectations shift quickly

The survey notes the increase was driven primarily by forward rate agreements and overnight index swaps.

A simple way to think about it: if more institutions are swapping floating for fixed (or vice versa), it’s because they’re actively managing where rates are headed—not assuming stability.

For everyday borrowers, that matters because fixed mortgage rates are closely tied to market yields and swap pricing, not just the Bank of Canada’s overnight rate.

What’s changing inside Canada’s FX market (and why it matters)

The survey breaks down FX activity by instrument type, currency, execution method, and maturity. The details sound technical, but each one maps to something practical.

FX swaps fell as a share; currency swaps rose

Even though turnover increased across all categories, the survey highlights a composition shift:

• The proportion of FX swaps fell
• The proportion of currency swaps increased
• Spot, outright forwards, and options stayed roughly similar as shares

This points to a market doing more structured balance-sheet and funding hedging. Currency swaps involve exchanging both principal and interest streams, which is commonly used when institutions have ongoing needs across currencies.

For Canadians, a stable and liquid hedging market helps keep the cost of cross-border funding from spilling into everyday rates. When hedging becomes expensive or scarce, lenders often protect margins by tightening credit or raising rates.

CAD and USD shares edged up; EUR and GBP edged down

In Canada, the US dollar, Canadian dollar, and euro were the top three traded currencies. The survey also notes:

• CAD and USD shares increased slightly
• EUR and Pound Sterling shares decreased

That lines up with a reality a lot of Canadian households already feel: many big price pressures and investment flows still run through USD channels—energy, imports, travel, and global risk appetite.

If you’re watching inflation and the Bank of Canada rate path, the CAD-USD relationship matters because currency strength can influence the cost of imported goods and the overall inflation backdrop.

Voice trading is still dominant (60%)

One of the more surprising stats for people who assume everything is “all electronic now”: about 60% of FX trades were executed by voice and 40% electronically.

That’s a sign the market still relies heavily on:

• relationship-based pricing
• negotiation for larger or more complex trades
• liquidity management during volatile moments

It doesn’t mean markets are outdated. It means when conditions get choppy, human judgment still plays a huge role in where the real prices are.

The personal-finance connection: how this market activity reaches your mortgage, savings, and investments

The practical link is transmission: institutional funding costs and hedging costs influence the rates and products consumers see. You won’t see “FX swap spread” on your mortgage statement, but you’ll feel it when lenders reprice.

Mortgages: why derivatives activity can show up in fixed-rate offers

Fixed mortgage rates are typically influenced by:

• Government bond yields
• Swap market pricing (especially for terms like 2–5 years)
• Lender funding spreads and hedging costs

When interest rate derivatives activity rises sharply, it often indicates that large players are actively repositioning. That can mean more competition for hedges, more sensitivity to data releases, and faster repricing in fixed-rate products.

Actionable mortgage move (December 2025 / early 2026):

• If you’re renewing within 6–9 months, ask lenders for both fixed and variable quotes and request a rate hold where possible.
• Don’t judge variable vs fixed only by today’s Bank of Canada policy rate. The market can price future cuts/hikes well before your lender changes posted rates.

Savings and GICs: why “policy rate held” doesn’t mean “your savings rate is safe”

Even with a stable policy rate, banks adjust deposit pricing based on:

• their need for funding
• competition
• expected margin pressure from loans

If hedging and wholesale markets are active (and potentially more expensive), banks can become more selective about what deposits they want and what they’re willing to pay.

Actionable savings move:

• Split cash into two buckets: near-term liquidity (high-interest savings) and rate certainty (a GIC ladder).
• A simple ladder: 3-, 6-, 12-, and 24-month terms so you’re not forced to guess where interest rates are going.

Investments: what higher turnover says about bond volatility and portfolio construction

Higher turnover in rate derivatives is also a signal that duration risk (sensitivity to rate changes) remains a big deal.

If you hold bond funds or balanced portfolios, you’ve probably learned the hard way that bonds can drop when yields rise. More active hedging often corresponds with:

• more frequent repricing of bond yields
• more dispersion between short and long-term rates

Actionable investing move:

• If you’re rate-sensitive, consider whether your “safe” allocation is overly concentrated in long-duration bonds.
• Match time horizon to instruments: money needed in 1–3 years shouldn’t be taking 7–10 years of duration risk.

A quick “people also ask” section (because these questions come up every time)

Does higher FX turnover mean the Canadian dollar will rise?

Not directly. Turnover measures activity, not direction. A rising CAD needs consistent support from rate differentials, commodity terms of trade, and global risk sentiment.

Does this survey predict Bank of Canada interest rate decisions?

No, but it helps explain the backdrop. The Bank of Canada watches market functioning and financial conditions. A market that’s very active in hedging can indicate heightened sensitivity to rate expectations, which feeds into overall financial conditions.

Why should households care about OTC derivatives at all?

Because banks and large lenders use them to manage risk. Efficient hedging markets can reduce funding stress. Stressed hedging markets tend to show up as tighter credit and wider spreads.

What to do next if you’re making a rate decision soon

The survey’s most useful message for regular Canadians is simple: rates still dominate the financial conversation behind the scenes, even when headlines calm down. A 110% jump in interest rate derivatives turnover doesn’t happen when everyone thinks the path is predictable.

If you’re planning a mortgage renewal, building a savings plan, or adjusting your investments for 2026, take a “plumbing-aware” approach:

1. Treat fixed rates as market-priced products, not just a reflection of the policy rate.
2. Avoid all-or-nothing decisions (all variable, all cash, all long bonds). Build ladders and ranges.
3. Ask better questions at your bank: What’s the rate hold period? What are the penalties? What’s the spread to prime? How often can you prepay?

If the Bank of Canada’s survey is telling us anything, it’s that institutional players are actively managing interest rate risk. The smart move is to assume you should too—just with simpler tools.

Where are you most exposed right now: a renewal date, too much cash earning too little, or an investment mix that’s more rate-sensitive than you realized?