January FX Seasonality Overview:
- The first month of the 12 months tends to see positive aspects for commodities and commodity-linked currencies.
- January is the most effective month of the 12 months for gold costs in latest historical past.
- Typical losses by the US Dollar are inclined to bode nicely for Australian, Canadian, and New Zealand Dollars.
The starting of the month warrants a evaluation of the seasonal patterns which have influenced foreign exchange markets over the previous a number of years. For December, our focus is on the trailing 5-year and 10-year performances, each of which absolutely seize buying and selling in the course of the period of quantitative easing and increasing authorities deficits for the reason that 2008/2009 Global Financial Crisis – not dissimilar from the atmosphere we discover ourselves in in the course of the coronavirus pandemic restoration.
However, a caveat is required firstly of 2022: we’re in the beginning phases of a Fed hike cycle. Asset purchases will stop by March, the place charges markets are at the moment pricing within the first 25-bps fee hike from the FOMC. Environments through which the Federal Reserve is mountain climbing charges whereas different main central banks – primarily the Bank of Japan and European Central Bank – are persisting with stimulative insurance policies have a tendency to supply bullish outcomes for the US Dollar.
Insofar as each EUR/USD and USD/JPY seasonality metrics are inclined to favor US Dollar weak point, it could be finest to low cost that perspective this month. The similar goes for gold costs, which generally have had a robust begin to the 12 months; a stronger US Dollar and rising US Treasury yields are usually adverse for bullion.
Monthly Forex Seasonality Summary – January 2022
Forex Seasonality in Euro (through EUR/USD)
January is a bullish month for EUR/USD, from a seasonality perspective. Over the previous 5-years, it has been the third finest month of the 12 months for the pair, averaging a achieve of +0.84%. Over the previous 10-years, it has been the sixth finest month of the 12 months, averaging a lack of -0.08%.
Forex Seasonality in British Pound (through GBP/USD)
January is a bullish month for GBP/USD, from a seasonality perspective. Over the previous 5-years, it has been the most effective month of the 12 months for the pair, averaging a achieve of +1.93%. Over the previous 10-years, it has been the fourth finest month of the 12 months, averaging a achieve of +0.12%.
Forex Seasonality in Japanese Yen (through USD/JPY)
January is a very bearish for USD/JPY, from a seasonality perspective. Over the previous 5-years, it has been the worst month of the 12 months for the pair, averaging a lack of -1.25%. Over the previous 10-years, it has been the worst month of the 12 months, averaging a lack of -0.56%.
Forex Seasonality in Australian Dollar (through AUD/USD)
January is a bullish month for AUD/USD, from a seasonality perspective. Over the previous 5-years, it has been the second finest month of the 12 months for the pair, averaging a achieve of +1..24%. Over the previous 10-years, it has been the fifth finest month of the 12 months, averaging a achieve of +0.09%.
Forex Seasonality in New Zealand Dollar (through NZD/USD)
January is a bullish month for NZD/USD, from a seasonality perspective. Over the previous 5-years, it has been the second finest month of the 12 months for the pair, averaging a achieve of +1.64%. Over the previous 10-years, it has been the fifth finest month of the 12 months, averaging a achieve of +0.28%.
Forex Seasonality in Canadian Dollar (through USD/CAD)
January is a combined month for USD/CAD, from a seasonality perspective. Over the previous 5-years, it has been the worst month of the 12 months for the pair, averaging a lack of -1.31%. Over the previous 10-years, it has been the third finest month of the 12 months, averaging a achieve of +0.74%.
Forex Seasonality in Swiss Franc (through USD/CHF)
January is a very bearish month for USD/CHF, from a seasonality perspective. Over the previous 5-years, it has been the third worst month of the 12 months for the pair, averaging a lack of -1.17%. Over the previous 10-years, it has been the worst month of the 12 months, averaging a lack of -1.22%.
Forex Seasonality in US S&P 500
January is a bullish for the US S&P 500, from a seasonality perspective. Over the previous 5-years, it has been the fourth finest month of the 12 months for the index, averaging a achieve of +2.8%. Over the previous 10-years, it has been the sixth finest month of the 12 months, averaging a achieve of +1.17%.
Forex Seasonality in Gold (through XAU/USD)
January is a very bullish month for gold (XAU/USD), from a seasonality perspective. Over the previous 5-years, it has been the second finest month of the 12 months for the dear metallic, averaging a achieve of +2.77%. Over the previous 10-years, it has been the most effective month of the 12 months, averaging a achieve of +4.15%.
— Written by Christopher Vecchio, CFA, Senior Strategist
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