Stocks are doing well, the US dollar is not

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FX April Seasonality Preview:

  • The fourth month of the year typically produces a risk tone against the US dollar.
  • European currencies are generally stronger in April, with EUR/USD and GBP/USD outperforming pairs like AUD/USD and NZD/USD.
  • April is one of the best months of the year for US stock markets – and gold prices too.

The start of the month warrants a review of the seasonal trends that have influenced currency markets over the past few years. For February, we focus on 5- and 10-year returns, both of which fully capture trade in an era of quantitative easing and expanding government deficits since the 2008/2009 global financial crisis – not much different from the environment we find ourselves in during the recovery from the coronavirus pandemic.

Nonetheless, there remains one important caveat for this month’s seasonality review: the Russian invasion of Ukraine. Disruption to the global commodity supply chain has produced continued volatility across all asset classes, and the risk of unforeseen events continues to dominate the news. Kind of like Marchseasonality trends may want to be downgraded in terms of reliability or actionability.

Monthly Forex Seasonality Summary – April 2022

Forex seasonality in Euro (via EUR/USD)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April is a verybullish month for EUR/USD, from a seasonality point of view. Over the past 5 years, it has been the fifth best month of the year for the pair, with an average gain of +0.41%. Over the past 10 years, it has been the best month of the year, with an average gain of +0.99%.

British Pound Forex Seasonality (via GBP/USD)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April is a very optimistic month for GBP/USD, from a seasonality perspective. Over the past 5 years, it has been the fourth best month of the year for the pair, with an average gain of +0.61%. Over the past 10 years, it has been the best month of the year, with an average gain of +1.33%.

Forex Seasonality in Japanese Yen (via USD/JPY)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April isa mixed month for USD/JPYfrom a seasonality point of view. Over the past 5 years, it has been the fourth best month of the year for the pair, with an average gain of +0.37%. Over the past 10 years, it has been the second worst month of the year, with an average loss of -0.54%.

Australian Dollar Forex Seasonality (via AUD/USD)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April is a bullish month for USD/USD, from a seasonality perspective. Over the past 5 years, it has been the third best month of the year for the pair, with an average gain of +0.66%. Over the past 10 years, it has been the second best month of the year, with an average gain of +0.71%.

New Zealand Dollar Forex Seasonality (via NZD/USD)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April isa mixed month for NZD/USD, from a seasonality perspective. Over the past 5 years, it has been the fifth worst month of the year for the pair, with an average loss of -0.26%. Over the past 10 years, it has been the third best month of the year, with an average gain of +0.34%.

Canadian Dollar Forex Seasonality (via USD/CAD)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April is a bearish month for USD/CADfrom a seasonality point of view. Over the past 5 years, it has been the sixth worst month of the year for the pair, with an average loss of -0.13%. Over the past 10 years it has been the worst month of the year, with an average loss of -1.18%.

Forex Seasonality in Swiss Franc (via USD/CHF)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April is a mixed month for USD/CHFfrom a seasonality point of view. Over the past 5 years, it has been the fourth best month of the year for the pair, with an average gain of +0.54%. Over the past 10 years, it has been the fourth worst month of the year, with an average loss of -0.37%.

Forex seasonality in the US S&P 500

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April isa very bullish month for the US S&P 500from a seasonality point of view. Over the past 5 years, it has been the best month of the year for the index, with an average gain of +4.61%. Over the past 10 years, it has been the second best month of the year, with an average gain of +2.58%.

Forex Seasonality in Gold (via XAU/USD)

Monthly Forex Seasonality - April 2022: Stocks Do Well, But the US Dollar Doesn't

April is a bullish month for gold (XAU/USD)from a seasonality point of view. Over the past 5 years, it has been the fifth best month of the year for the precious metal, with an average gain of +2.12%. Over the past 10 years, it has been the fifth best month of the year, with an average gain of +0.84%.

— Written by Christopher Vecchio, CFA, Senior Strategisyou

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