Typically a good month for USD

May FX seasonality overview:

  • the fifth Months of the year generally sees gains for the US dollar.
  • European currencies typically weaken across the board in May, with negative 10-year trends overshadowing positive 5-year trends.
  • May generally produced modest gains for US equity markets and was mixed for gold prices.

The start of the month warrants a review of the seasonal trends that have influenced currency markets over the past few years. For May, we focus on the 5- and 10-year returns, both of which fully capture trade during an era of widespread central bank intervention since the 2008/2009 global financial crisis, as well as the weak stimulus attempt that has tracking – no different than the environment we find ourselves in during the recovery from the coronavirus pandemic.

As has been the case for the previous two months, unique circumstances complicate the viability of using seasonality as a guide to expectations for price action. Russia’s invasion of Ukraine continues, disrupting global commodity markets. China’s zero-COVID strategy persists, despite the problems it has caused to supply chains. And now the Federal Reserve has triggered its first 50 basis point rate hike in more than 20 years. Seasonality trends remain degraded in terms of reliability or actionability.

Monthly Forex Seasonality Summary – May 2022

Forex seasonality in Euro (via EUR/USD)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May is a mixed month for EUR/USD, from 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 +0.53%. Over the past 10 years it has been the worst month of the year, with an average loss of -1.18%.

British Pound Forex Seasonality (via GBP/USD)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May is a very bearish month for GBP/USD, from a seasonality perspective. Over the past 5 years, this has been the worst month of the year for the pair, with an average loss of -1.22%. Over the past 10 years it has been the worst month of the year, with an average loss of -1.53%.

Forex Seasonality in Japanese Yen (via USD/JPY)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May isa mixed month for USD/JPYfrom a seasonality point of view. Over the past 5 years, it has been the fourth worst month of the year for the pair, with an average loss of -0.61%. Over the past 10 years, it has been the fourth best month of the year, with an average gain of +0.56%.

Australian Dollar Forex Seasonality (via AUD/USD)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May is a bearish month for USD/USD, from a seasonality perspective. Over the past 5 years, it has been the sixth best month of the year for the pair, with an average gain of +0.16%. Over the past 10 years it has been the worst month of the year, with an average loss of -2.15%.

New Zealand Dollar Forex Seasonality (via NZD/USD)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May isa bear month for NZD/USD, from a seasonality perspective. Over the past 5 years, it has been the fifth best month of the year for the pair, with an average gain of +0.67%. Over the past 10 years it has been the worst month of the year, with an average loss of -2.29%.

Canadian Dollar Forex Seasonality (via USD/CAD)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May is a bullish month for USD/CADfrom a seasonality point of view. Over the past 5 years, it has been the fifth worst month of the year for the pair, with an average loss of -0.45%. Over the past 10 years, it has been the best month of the year, with an average gain of +1.17%.

Forex Seasonality in Swiss Franc (via USD/CHF)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May is a mixed month for USD/CHFfrom a seasonality point of view. Over the past 5 years, it has been the second worst month of the year for the pair, with an average loss of -1.40%. Over the past 10 years, it has been the best month of the year, with an average gain of +0.89%.

Forex seasonality in the US S&P 500

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May isa somewhat bullish (if not disappointing) month for the US S&P 500from a seasonality point of view. Over the past 5 years, it has been the fifth worst month of the year for the index, with an average gain of +0.36%. Over the past 10 years, it has been the second worst month of the year, with an average gain of +0.23%.

Forex Seasonality in Gold (via XAU/USD)

Monthly Forex Seasonality - May 2022: Generally a Good Month for USD

May is a mixed month for gold (XAU/USD)from a seasonality point of view. Over the past 5 years, it has been the fourth best month of the year for the precious metal, with an average gain of +2.27%. Over the past 10 years, it has been the third worst month of the year, with an average loss of -1.02%.

— Written by Christopher Vecchio, CFA, Senior Strategisyou

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