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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).

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

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

Forex Seasonality in Euro (via EUR/USD)

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

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)

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

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)

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

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)

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

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%.

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

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

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)

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

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)

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

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

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

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)

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

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%.

--- 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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