News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bearish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Mixed
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • another nasty week in Cable $GBPUSD but most of that sell-off was Monday and Tuesday, after which support came into play. 2712 has now helped to hold the lows for three (going on four) days - even as $USD rally has continued https://t.co/kKURzmx61S https://t.co/eHZZ9rZC9X
  • Commodities Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Gold: -0.32% Silver: -0.93% Oil - US Crude: -1.02% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/fdLE2SYbFA
  • While risks may be starting to skew to the upside in Brexit negotiations, GBP/USD continues to trade in choppy fashion, with pullbacks finding support at 1.2720-30. Get your $GBPUSD market update from @JMcQueenFX here:https://t.co/TOrUJKapR1 https://t.co/txDbUikOFZ
  • Indices Update: As of 13:00, these are your best and worst performers based on the London trading schedule: FTSE 100: -0.21% US 500: -0.30% Wall Street: -0.50% France 40: -1.37% Germany 30: -1.72% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/eOrhf8Ozhy
  • Heads Up:🇺🇸 Fed Williams Speech due at 13:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-09-25
  • 🇺🇸 Durable Goods Orders Ex Transp MoM (AUG) Actual: 0.4% Expected: 1.2% Previous: 2.4% https://www.dailyfx.com/economic-calendar#2020-09-25
  • 🇺🇸 Durable Goods Orders MoM (AUG) Actual: 0.4% Expected: 1.5% Previous: 11.2% https://www.dailyfx.com/economic-calendar#2020-09-25
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.29%, while traders in EUR/GBP are at opposite extremes with 64.27%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/Pr6fmzDXyZ
  • Forex Update: As of 12:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.07% 🇬🇧GBP: -0.07% 🇯🇵JPY: -0.08% 🇨🇭CHF: -0.14% 🇦🇺AUD: -0.22% 🇪🇺EUR: -0.31% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/vRMbDk8nMT
  • Heads Up:🇺🇸 Durable Goods Orders Ex Transp MoM (AUG) due at 12:30 GMT (15min) Expected: 1.2% Previous: 2.4% https://www.dailyfx.com/economic-calendar#2020-09-25
October Forex Seasonality Foresees Disappointing US Dollar Performance

October Forex Seasonality Foresees Disappointing US Dollar Performance

2015-10-05 16:00:00
Christopher Vecchio, CFA, Senior Strategist
Share:

Talking Points:

- October has been the second-worst month of the year for the US Dollar.

- The commodity currency bloc has fared well at the start of Q4.

- October marks the second of four consecutive months of gains for the S&P 500.

See the full rundown of seasonal patterns broken down by currency pairs below, and to receive reports from this analyst, sign up for Christopher’s distribution list.

The beginning of the month warrants a review of the seasonal patterns that have influenced forex markets over the past several years. In our previous study, we decided to once again focus only on recent performance during the QE era of central bank policies (2009-present).

For October, we continue to focus on the period of 2009 to 2014. The small sample size is not ideal, and we recognize that there is increased statistical stability with using longer time periods. However, because of the specific uniqueness of the past six years relative to any other time period in market history - the era of quantitative easing - we've elected to attempt to increase the stability of the estimates with the shorter time period.

October Forex Seasonality Foresees Disappointing US Dollar Performance

Forex Seasonality in Euro (via EURUSD)

October Forex Seasonality Foresees Disappointing US Dollar Performance

October has been the best month of the year during the QE era for EURUSD. Buoyed by an outsized performance in 2011, the Euro has been the second-best performer overall in October versus the US Dollar, only trailing the Australian Dollar. While such historical performance would normally lead us to an outright bullish bias for EURUSD, it’s worth noting that EURUSD’s performance has deteriorated each year since 2011. From 2009 to 2011, EURUSD averaged a gain of +287-pips in October; from 2012 to 2014, EURUSD averaged a gain of +17-pips. Accordingly, our seasonal study suggests only a moderate upside performance in EURUSD.

Forex Seasonality in British Pound (via GBPUSD)

October Forex Seasonality Foresees Disappointing US Dollar Performance

Like EURUSD, GBPUSD’s performance in October has been characterized by two distinct periods: the strong 2009 to 2011 period; and the weak 2012 to 2014 period. Overall, October has been the least-bullish month of the year for GBPUSD, and recent performance has been deteriorating rapidly. From 2009 to 2011, GBPUSD averaged a gain of +432-pips in October; from 2012 to 2014, GBPUSD averaged a loss of -134-pips. A neutral bias is appropriate for GBPUSD.

Forex Seasonality in Japanese Yen (via USDJPY)

October Forex Seasonality Foresees Disappointing US Dollar Performance

The October seasonal forecast for USDJPY is slightly bullish. The average performance calls for higher prices, with five of the past six years having produced gains. In context of other instruments’ seasonal tendencies, a slight USDJPY bullish bias makes sense: risk assets (like the Australian Dollar and the S&P500) are expected to rally, and this may offset broader USD-based concerns that would weigh across the USD-spectrum (like the Federal Reserve pushing back its rate liftoff timeline).

Forex Seasonality in Australian Dollar (via AUDUSD)

October Forex Seasonality Foresees Disappointing US Dollar Performance

October has been the best month of the year for AUDUSD, and the Australian Dollar has been the best performing major currency versus the US Dollar during the month. While skewed to the upside by a large outsized performance in 2011 (+868-pips), AUDUSD has gained each year during the QE era. As such, we favor further gains in the pair.

Forex Seasonality in USDOLLAR

October Forex Seasonality Foresees Disappointing US Dollar Performance

October has been the second-worst month of the year for the USDOLLAR Index (an aggregate of EURUSD, GBPUSD, AUDUSD, and USDJPY) during the QE era. Although gains have materialized in two of the past three years, the average performance for the USDOLLAR Index during October is -102.14 points. Given the breakdown of the individual components of the index, we expect losses to materialize in October once again.

Forex Seasonality in New Zealand Dollar (via NZDUSD)

October Forex Seasonality Foresees Disappointing US Dollar Performance

The seasonal forecast for NZDUSD in October is neutral. While the average performance is positive (+98-pips), losses have materialized in three consecutive years, and four of the past six overall. It seems October is a ‘boom or bust’ month for NZDUSD during the QE era: either an outsized gain; or a meager loss. Even if the New Zealand Dollar is forecast to have a middling performance, broad US Dollar underperformance could boost NZDUSD.

Forex Seasonality in Canadian Dollar (via USDCAD)

October Forex Seasonality Foresees Disappointing US Dollar Performance

October hasn’t produced much by way of consistent performance for USDCAD during the QE era, and as such, the seasonal forecast is neutral. USDCAD has averaged a loss of -15.5-pips in October despite seeing gains in four of the past six years. It’s worth noting that October has produced a smaller range than September, and into year-end, USDCAD month ranges have narrowed in terms of disparity of performance.

Forex Seasonality in Swiss Franc (via USDCHF)

October Forex Seasonality Foresees Disappointing US Dollar Performance

October has been a seasonally weak month for USDCHF, even if the performance range has been smaller than any other month during the QE era. USDCHF has rallied in each of the past two years, but its performance from 2011 to 2014 was largely determined by EURUSD (given the floor in EURCHF until January 2015). Among the USD-pairs, USDCHF is perhaps the least interesting from a seasonal standpoint through the end of the year.

Forex Seasonality in S&P 500

October Forex Seasonality Foresees Disappointing US Dollar Performance

‘Sell in May and go away?’ We’re supposed to be on the other side of ‘away’ now that the summer trading months have ended, and markets haven’t turned around as has been typical during the QE era. The S&P500 started September at 1968 and ended the month at 1911. Q4 has been the most bullish quarter of the year for US equities during the QE era, so if there was ever a time for a recovery, it would be now. The S&P500 has rallied in four of the past five years, and has averaged a gain of +39.15 points during October during the QE era.

Forex Seasonality in Gold

October Forex Seasonality Foresees Disappointing US Dollar Performance

The Gold-USD relationship the past few years has been fairly straightforward: as the US Dollar has strengthened since its 2011 lows, Gold has weakened dramatically from its 2011 highs. As such, in a month where the US Dollar is expected to weaken broadly, it’s no surprise that October is expected to produce a positive performance for Gold. Despite the average net-gain over the past six years, much like in EURUSD and GBPUSD, the October performance has been drastically different depending upon its measurement period: from 2009 to 2011, Gold averaged a gain of $59.84; from 2012 to 2015, Gold averaged a loss of -$30.93. Accordingly, only a slightly bullish bias is warranted.

Read more: Euro in Holding Pattern as Traders Await Clues on ECB’s Next Move

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

To be added to Christopher’s e-mail distribution list, please fill out this form

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES