Monthly Forex Seasonality – January 2022: The start of the year bodes well for AUD, GBP and gold

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January currency seasonality overview:

  • The first month of the year tends to see gains for commodities and commodity-related currencies.
  • January is the best month of the year for gold prices in recent history.
  • Typical losses for the US dollar tend to bode well for the Australian, Canadian and New Zealand dollars.

The start of the month warrants a review of the seasonal trends that have influenced the forex markets in recent years. For December, we focus on 5 and 10 year performance, both of which fully capture trade in the era of quantitative easing and rising government deficits since the 2008/2009 global financial crisis, which does not reminiscent of the environment we find ourselves in during the resumption of the coronavirus pandemic.

However, one caveat in early 2022 is that we are at the start of a Fed bullish cycle. Asset purchases will cease by March, where rate markets are currently anticipating the FOMC’s first 25 basis point rate hike. Environments in which the Federal Reserve hikes rates while other major central banks – primarily the Bank of Japan and the European Central Bank – persist with stimulus policies tend to produce bullish results for the US dollar.

As EUR / USD and USD / JPY seasonality measures tend to favor the weakness of the US dollar, it may be better to rule out this prospect this month. The same goes for gold prices, which generally had a good start to the year; a stronger US dollar and rising US Treasury yields tend to be negative for bullion.

Monthly Forex Seasonality Summary – January 2022

Seasonality Forex in Euro (via EUR / USD)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a bullish months for EUR / USD, seasonally. Over the past 5 years, this is the third best month of the year for the pair, with an average gain of + 0.84%. Over the past 10 years, it has been the sixth best month of the year, with an average loss of -0.08%.

Seasonality of Forex in Sterling (via GBP / USD)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a bullish months for GBP/ USD, from a seasonality perspective. Over the past 5 years, this has been the best month of the year for the pair, with an average gain of +1.93%. Over the past 10 years, this is the fourth best month of the year, with an average gain of + 0.12%.

Japanese Yen Forex Seasonality (via USD / JPY)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a very bearish for USD / JPY, from the point of view of seasonality. Over the past 5 years, this has been the worst month of the year for the pair, with an average loss of -1.25%. Over the past 10 years, it has been the worst month of the year, with an average loss of -0.56%.

Forex seasonality in Australian dollar (via AUD / USD)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a bullish months for EUR/ USD, from a seasonality perspective. Over the past 5 years, this has been the second best month of the year for the pair, with an average gain of + 1..24%. Over the past 10 years, this is the fifth best month of the year, with an average gain of + 0.09%.

New Zealand Dollar Forex Seasonality (via NZD / USD)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a bull months for NZD/ USD, from a seasonality perspective. Over the past 5 years, this is the second best month of the year for the pair, with an average gain of + 1.64%. Over the past 10 years, this is the fifth best month of the year, with an average gain of + 0.28%.

Forex Seasonality in Canadian Dollar (via USD / CAD)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a mixed months for USD / CAD, from the point of view of seasonality. Over the past 5 years, this has been the worst month of the year for the pair, with an average loss of -1.31%. Over the past 10 years, it has been the third best month of the year, with an average gain of + 0.74%.

Forex seasonality in Swiss Franc (via USD / CHF)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a very bearish months for USD / CHF, from the point of view of seasonality. Over the past 5 years, this has been the third worst month of the year for the pair, with an average loss of -1.17%. Over the past 10 years, it has been the worst month of the year, with an average loss of -1.22%.

Forex seasonality in the US S&P 500

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a bullish for the American S&P 500, from the point of view of seasonality. Over the past 5 years, this is the fourth best month of the year for the index, with an average gain of + 2.8%. Over the past 10 years, this is the sixth best month of the year, with an average gain of + 1.17%.

Gold Forex Seasonality (via XAU / USD)

Monthly Forex Seasonality - January 2022: The start of the year bodes well for AUD, GBP and gold

January is a very bullish months for gold (XAU / USD), from the point of view of seasonality. Over the past 5 years, it has been the second best month of the year for the precious metal, with an average gain of + 2.77%. Over the past 10 years, it has been the best month of the year, with an average gain of + 4.15%.

— Written by Christopher Vecchio, CFA, Senior Strategist

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