Stocks Do Well, US Dollar Does Not

April FX Seasonality Overview:

  • The fourth month of the year typically produces a risk-on tone to the detriment of the US Dollar.
  • The European currencies are generally stronger in April, with EUR/USD and GBP/USD outpacing pairs like AUD/USD and NZD/USD.
  • April is one of the best months of the year for US equity markets – and gold prices, too.

The beginning of the month warrants a review of the seasonal patterns that have influenced forex markets over the past several years. For February, 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.

Nevertheless, there remains a significant caveat for this month’s seasonality review: the Russian invasion of Ukraine. Disruption in the global commodity supply chain has produced persistent volatility across asset classes, and unforeseen event risk continues to dominate the news wire. Much like in Marchseasonality tendencies may want to be downgraded in terms of their reliability or actionability.

Monthly Forex Seasonality Summary – April 2022

Forex Seasonality in Euro (via EUR/USD)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April is at verybullish month for EUR/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 +0.41%. Over the past 10-years, it has been the best month of the year, averaging a gain of +0.99%.

Forex Seasonality in British Pound (via GBP/USD)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April is at very bullish 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, averaging a gain of +0.61%. Over the past 10-years, it has been the best month of the year, averaging a gain of +1.33%.

Forex Seasonality in Japanese Yen (via USD/JPY)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April isa mixed month for USD/JPYfrom 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 +0.37%. Over the past 10-years, it has been the second worst month of the year, averaging a loss of -0.54%.

Forex Seasonality in Australian Dollar (via AUD/USD)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April is at 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, averaging a gain of +0.66%. Over the past 10-years, it has been the second best month of the year, averaging a gain of +0.71%.

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

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April ismixed 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, averaging a loss of -0.26%. Over the past 10-years, it has been the third best month of the year, averaging a gain of +0.34%.

Forex Seasonality in Canadian Dollar (via USD/CAD)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April is at bearish month for USD/CADfrom 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 -0.13%. Over the past 10-years, it has been the worst month of the year, averaging a loss of -1.18%.

Forex Seasonality in Swiss Franc (via USD/CHF)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

April is at mixed month for USD/CHFfrom 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 +0.54%. Over the past 10-years, it has been the fourth worst month of the year, averaging a loss of -0.37%.

Forex Seasonality in US S&P 500

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

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

Forex Seasonality in Gold (via XAU/USD)

Monthly Forex Seasonality – April 2022: Stocks Do Well, US Dollar Does Not

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

— Written by Christopher Vecchio, CFA, Senior Strategisyou

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