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Monthly Forex Seasonality - August 2021: Great for Gold, Bad for ’Risk’ FX

Monthly Forex Seasonality - August 2021: Great for Gold, Bad for ’Risk’ FX

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

  • August is typically a risk-off month for FX markets, with the Japanese Yen and Swiss Franc the top performers. The Australian and New Zealand Dollars have declined the most.
  • Gold prices tend to fare well in August; it’s been the second best month of the year over the past decade.
  • US equities have done well in recent years, but August is typically the beginning of the rockiest part of the year for stock markets (August, September, October).
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The beginning of the month warrants a review of the seasonal patterns that have influenced forex markets over the past several years. For August, 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 – not dissimilar from the environment we find ourselves in during the coronavirus pandemic recovery.

Monthly Forex Seasonality Summary – August 2021

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Forex Seasonality in Euro (via EUR/USD)

August is a neutral month for EUR/USD, from a seasonality perspective. Over the past 5-years, it has been the worst positive month of the year for the pair, averaging a gain of +0.03%. Over the past 10-years, it has been the fifth best of the year, averaging a gain of +0.17%.

Forex Seasonality in British Pound (via GBP/USD)

August is a bearish month for GBP/USD, from a seasonality perspective. Over the past 5-years, it has been the fifth worst month of the year for the pair, averaging a loss of -0.39%. Over the past 10-years, it has been the fourth west month of the year, averaging a gain of -0.33%.

Forex Seasonality in Japanese Yen (via USD/JPY)

August is a bearish month for USD/JPY, from a seasonality perspective. Over the past 5-years, it has been the fifth best month of the year for the pair, averaging a loss of -0.38%. Over the past 10-years, it has been the fifth worst month of the year, averaging a loss of -0.23%.

Forex Seasonality in Australian Dollar (via AUD/USD)

August is a very bearish month for AUD/USD, from a seasonality perspective. Over the past 5-years, it has been the fourth worst month of the year for the pair, averaging a loss of -0.66%. Over the past 10-years, it has been the third worst month of the year, averaging a loss of -1.07%.

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

August is a very bearish month for NZD/USD, from a seasonality perspective. Over the past 5-years, it has been the worst month of the year for the pair, averaging a loss of -1.71%. Over the past 10-years, it has been the second worst month of the year, averaging a loss of -2.08%.

Forex Seasonality in Canadian Dollar (via USD/CAD)

August is a neutral month for USD/CAD, from a seasonality perspective. Over the past 5-years, it has been the sixth worst month of the year for the pair, averaging a loss of -0.19%. Over the past 10-years, it has been the sixth worst month of the year, averaging a gain of +0.24%.

Forex Seasonality in Swiss Franc (via USD/CHF)

August is a bearish month for USD/CHF, from a seasonality perspective. Over the past 5-years, it has been the fifth worst month of the year for the pair, averaging a loss of -0.58%. Over the past 10-years, it has been the sixth best month of the year, averaging a loss of -0.10%.

Forex Seasonality in US S&P 500

August is a very bullish month for the US S&P 500, from a seasonality perspective. Over the past 5-years, it has been the sixth best month of the year for the index, averaging a gain of +1.63%. Over the past 10-years, it has been the third worst month of the year, averaging a loss of -0.12%.

Forex Seasonality in Gold (via XAU/USD)

August is a very bullish month for gold (XAU/USD), from a seasonality perspective. Over the past 5-years, it has been the sixth worst month of the year, averaging a gain of +1.24%. Over the past 10-years, it has been the second best month of the year, averaging a gain of +3.24%.

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--- 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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