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Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

Christopher Vecchio, CFA, Senior Strategist
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January FX Seasonality Overview:

  • January typically brings about US Dollar weakness, while the commodity currencies (and commodities themselves) tend to do well.
  • US Dollar seasonal weakness (via-a-vis the DXY Index) has been historically compelled by a stronger British Pound, Canadian Dollar, and Swiss Franc.
  • Gold prices typically shine at the start of the year, and the 5-year performance exceeds what is an impressive 10-year track record.

The beginning of the month warrants a review of the seasonal patterns that have influenced forex markets over the past several years. For January, our focus is on the trailing 5-year and 10-year performances, both of which fully capture trading during the era of quantitative easing and expanding government deficits since the 2008/2009 Global Financial Crisis.

Monthly Forex Seasonality Summary – January 2021

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

Forex Seasonality in Euro (via EUR/USD)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a bullish month for EUR/USD, from a seasonality perspective. Over the past 5-years, it has been the fourth best month of the year for the pair, averaging a gain of +0.91%. Over the past 10-years, it has been the third best month of the year, averaging a gain of +0.22%.

Forex Seasonality in British Pound (via GBP/USD)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a bullish month for GBP/USD, from a seasonality perspective. Over the past 5-years, it has been the second best month of the year for the pair, averaging a gain of +1.20%. Over the past 10-years, it has been the second best month of the year, averaging a gain of +0.35%.

Forex Seasonality in Japanese Yen (via USD/JPY)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a bearish month for USD/JPY, from a seasonality perspective. Over the past 5-years, it has been the second worst month of the year for the pair, averaging a loss of -1.37%. Over the past 10-years, it has been the third worst month of the year, averaging a loss of -0.59%.

Forex Seasonality in Australian Dollar (via AUD/USD)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a slightly bullish month for AUD/USD, from a seasonality perspective. Over the past 5-years, it has been the fourth best month of the year for the pair, averaging a gain of +0.82%. Over the past 10-years, it has been the fourth best month of the year, averaging a loss of -0.10%.

Forex Seasonality in New Zealand Dollar (via NZD/USD)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a slightly bullish month for NZD/USD, from a seasonality perspective. Over the past 5-years, it has been the fifth best month of the year for the pair, averaging a gain of +0.59%. Over the past 10-years, it has been the seventh best month of the year, averaging a gain of +0.12%.

Forex Seasonality in Canadian Dollar (via USD/CAD)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a mixed month for USD/CAD, from a seasonality perspective. Over the past 5-years, it has been the second worst month of the year for the pair, averaging a loss of -1.19%. Over the past 10-years, it has been the third best month of the year, averaging a gain of +0.73%.

Forex Seasonality in Swiss Franc (via USD/CHF)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a bearish month for USD/CHF, from a seasonality perspective. Over the past 5-years, it has been the third worst month of the year for the pair, averaging a loss of -0.87%. Over the past 10-years, it has been the second worst month of the year, averaging a loss of -1.18%.

Forex Seasonality in US S&P 500

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a bullish month for the US S&P 500, from a seasonality perspective. Over the past 5-years, it has been the fourth best month of the year for the index, averaging a gain of +2.01%. Over the past 10-years, it has been the fourth best month of the year, averaging a gain of +1.50%.

Forex Seasonality in Gold (via XAU/USD)

Monthly Forex Seasonality - January 2021: Start of Year Favors CAD, Gold Strength; USD Weakness

January is a very bullish month for gold (XAU/USD), from a seasonality perspective. Over the past 5-years, it has been the best month of the year for the precious metal, averaging a gain of +4.38%. Over the past 10-years, it has been the best month of the year, averaging a gain of +3.80%.

--- Written by Christopher Vecchio, CFA, Senior Currency Strategist

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

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