US dollar strengthens; Gold and stocks weak

September FX Seasonal Overview:

• The ninth month of the year usually sees a strong showing of the US dollar.
• The euro and the Japanese yen underperformed other majors in September.
• September has been a weak month for both gold prices and US stocks.

The beginning of the month guarantees a review of the seasonal patterns that have affected the forex markets over the past several years. For September, our focus is on performance over the past 5 years and 10 years, both of which capture business during the cessation of aggressive central bank intervention triggered by the 2008/2009 global financial crisis – not different from the environment we are in. Find yourself now.

Nevertheless, as has been the case for the past six months, continued abnormal conditions reduce the reliance on using seasonality as an important price action indicator. It remains the case that global commodity markets are distressed amid Russia’s continued invasion of Ukraine, and global supply chains still dealing with China’s on-again, off-again zero-COVID strategy. Thus, we must conclude that strategies based on seasonal trends are still unreliable compared to previous years.

Monthly Forex Seasonal Summary – September 2022

Forex Seasonal in Euros (via EUR/USD)

From a weather perspective, September is a bearish month for EUR/USD. Over the past 5 years, it has been the second worst month of the year for the couple, with an average loss of -1.06%. In the last 10 years, it has been the fifth worst month of the year, with an average loss of -0.42%.

Forex Seasonal in British Pounds (via GBP/USD)

From a weather perspective, September is a mixed month for GBP/USD. Over the past 5 years, this has been the sixth worst month of the year for the pair, losing an average of -0.03%. Over the past 10 years, it has been the third best month of the year, with an average increase of +0.12%.

Forex Seasonal in Japanese Yen (via USD/JPY)

From a weather perspective, September is a bullish month for USD/JPY. Over the past 5 years, this has been the best month of the year for the couple, with an average gain of +1.43%. In the last 10 years, it has been the third best month of the year, with an average increase of +0.89%.

Forex Seasonal in Australian Dollars (via AUD/USD)

September is a bearish month from a seasonal perspective for AUD/USD. Over the past 5 years, with an average loss of -0.96%, this has been the third worst month of the year for the pair. In the last 10 years, it has been the fourth worst month of the year, with an average loss of -0.52%.

Forex Seasonal in New Zealand Dollars (via NZD/USD)

From a seasonal perspective, September is a mixed month for NZD/USD. Over the past 5 years, this has been the fourth worst month of the year for the pair, with an average loss of -0.89%. In the last 10 years, it has been the fifth worst month of the year, with an average increase of +0.11%.

Forex Seasonal in Canadian Dollars (via USD/CAD)

From a weather perspective, September is a bullish month for USD/CAD. Over the past 5 years, this has been the fifth best month of the year for the pair, with an average gain of +0.19%. Over the past 10 years, it has been the 6th best month of the year, with an average increase of +0.30%.

Forex Seasonal in Swiss Francs (via USD/CHF)

From a weather perspective, September is a bullish month for USD/CHF. Over the past 5 years, this has been the best month of the year for the pair, with an average gain of +1.36%. In the last 10 years, it has been the third best month of the year, with an average gain of +0.59%.

US S&P 500. forex seasonal

September is a bearish month for the US S&P 500, from a seasonal standpoint. Over the past 5 years, it has been the second worst month of the year for the index, with an average loss of -0.92%. In the last 10 years, it has been the worst month of the year with an average loss of -0.35%.

Forex Seasonal in Gold (via XAU/USD)

September is a very bearish month for Gold (XAU/USD), from a seasonal standpoint. In the last 5 years, it has been the worst month of the year for the precious metal, losing an average of -2.89%. In the last 10 years, it has been the second worst month of the year with an average loss of -2.18%.

— Written by Christopher Vecchio, CFA, Senior Strategist