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
Forex Seasonality in Euro (via EUR/USD)
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)
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)
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)
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)
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)
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)
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
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)
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
