July FX Seasonality Overview:
- The seventh month of the year typically sees modest losses for the US Dollar.
- Recently, the commodity currencies have performed well in July, with positive 5-year averages for each of AUD, CAD, and NZD.
- July has been a good month for both US stocks and gold prices.
The beginning of the month warrants a review of the seasonal patterns that have influenced forex markets over the past several years. For July, our focus is on the trailing 5-year and 10-year performances, both of which fully capture trading during an era of aggressive central bank intervention since the 2008/2009 Global Financial Crisis, as well as the ensuing feeble attempt to pullback stimulus – not dissimilar from the environment we find ourselves in during the coronavirus pandemic recovery.
As has been the case for the past four months, persistent atypical conditions reduce the practicality of using seasonality as a price action indicator. Global commodity markets remain in disarray as Russia’s invasion of Ukraine continues, while global supply chains are still clogged amid China’s unrelenting zero COVID strategy. Unfortunately, strategies based around seasonality tendencies remain downgraded in terms of their reliability or actionability.
Monthly Forex Seasonality Summary – July 2022
Forex Seasonality in Euro (via EUR/USD)
July is a bullish month for EUR/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 +1.21%. Over the past 10-years, it has been the fourth best month of the year, averaging a gain of +0.24%.
Forex Seasonality in British Pound (via GBP/USD)
July is a bullish month for GBP/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 +0.53%. Over the past 10-years, it has been the sixth best month of the year, averaging no change.
Forex Seasonality in Japanese Yen (via USD/JPY)
July isa bearish month for USD/JPY, 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 -0.65%. Over the past 10-years, it has been the third worst month of the year, averaging a loss of -0.51%.
Forex Seasonality in Australian Dollar (via AUD/USD)
July is a 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 +0.65%. Over the past 10-years, it has been the sixth best month of the year, averaging a loss of -0.05%.
Forex Seasonality in New Zealand Dollar (via NZD/USD)
July isa bullish month for NZD/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 +0.68%. Over the past 10-years, it has been the fourth best month of the year, averaging a gain of +0.29%.
Forex Seasonality in Canadian Dollar (via USD/CAD)
July is a bearish month for USD/CAD, 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 -0.91%. Over the past 10-years, it has been the third worst month of the year, averaging a loss of -0.04%.
Forex Seasonality in Swiss Franc (via USD/CHF)
July is a mixed 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 -0.59%. Over the past 10-years, it has been the sixth worst month of the year, averaging a gain of +0.31%.
Forex Seasonality in US S&P 500
July isa very bullish month for the US S&P 500, from a seasonality perspective. Over the past 5-years, it has been the third best month of the year for the index, averaging a gain of +2.93%. Over the past 10-years, it has been the third best month of the year, averaging a gain of +2.49%.
Forex Seasonality in Gold (via XAU/USD)
July is a bullish month for gold (XAU/USD), from a seasonality perspective. Over the past 5-years, it has been the third best month of the year for the precious metal, averaging a gain of +2.74%. Over the past 10-years, it has been the third best month of the year, averaging a gain of +1.44%.
--- Written by Christopher Vecchio, CFA, Senior Strategistt
