Forex Seasonality Update: USDJPY May Decline in Month of August

Forex trading market seasonality is an effect widely studied as a primary mover of major currency pairs, as long-term studies suggest that certain seasonal patterns may be able to predict forex price moves. The month of August has not historically produced any major seasonal effects, however; only the USDJPY shows a consistent tendency to move consistently on the month.

Forex Seasonality in the Japanese Yen

</p>

The Japanese Yen has rallied (USDJPY declines) in the month of August for 9 out of the past 11 years—good for an average 200+ pip decline across that stretch. Though the justifications for said occurrences are admittedly less clear, the trend is consistent enough such that we expect similar performance in the month ahead. Our monthly forecast for the month of August is accordingly bearish.

Forex Seasonality in the Canadian Dollar

</p>

The Canadian Dollar has rallied (USDCAD declined) in August for 8 of the past 11 years, but relatively outsized gains in the other 3 years have meant that the average move has been fairly small. There is no obvious fundamental justification for Canadian Dollar seasonality in August, and as such we see little reason for a continuation in previous seasonal trends.

Forex Seasonality in the Australian Dollar

</p>

The Australian Dollar has fallen in August through 8 of the past 11 years, with the AUDUSD losing an average of over 100 pips through that stretch. Yet it is likewise clear that said average is skewed by several outsized losses in 1998, 2007, and 2008. We subsequently question whether there is a true seasonal trend for the month of August, and remain skeptical of fundamental justifications for such a pattern.

Forex Seasonality in the British Pound

</p>

The British Pound has shown similarly limited seasonal trends through the month of August. In fact, the average monthly change in the GBPUSD through August would be zero if we excluded an outsized decline in 2008. . Suffice it to say, we do not expect any real seasonal pressures on the GBPUSD pair.

Forex Seasonality in the New Zealand Dollar

</p>

The New Zealand dollar has shown little consistency or patterns through the month of August, and we expect little seasonal influence on the pair.

Forex Seasonality in the Euro/US Dollar

</p>

The Euro has shown a fairly inconsistent seasonal trend through the month of August, falling in 5 of the past 10 years of trading. We do not expect any particularly noteworthy seasonal influences on the EURUSD through the month ahead.

</p>

Forex Seasonality in the Swiss Franc

</p>

The Swiss Franc has rallied in August for 7 of the past 11 years, but its average monthly change through that stretch is barely positive. We do not expect seasonal pressures to affect the pair through the coming month of trade.

Written by David RodrĂ­guez, Quantitative Strategist for DailyFX.com
We always want to hear your feedback on new DailyFX articles. Want more articles like this? Less? What do you want to see? Send e-mails to <[email protected]> .