Monthly Forex Seasonality – October 2021: Good News for US Dollar, Bad News for Risk

October FX Seasonality Overview:

• The start of the fourth quarter typically sees US Dollar strength, which portends well for continuation of recent greenback gains.
• October has been a mixed period for US stocks, but losses have been more pronounced in recent years (5-year average is negative, 10-year average is positive).
• With higher yielding currencies and risk-correlated assets pressured, October tends to produce minor gains for gold prices.

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

Monthly Forex Seasonality Summary – October 2021

Forex Seasonality in Euro (via EUR/USD)

October is a very bearish month for EUR/USD, from a seasonality perspective. Over the past 5-years, it has been the second worst month of the year for the pair, averaging a loss of -0.90%. Over the past 10-years, it has been the fifth worst of the year, averaging a loss of -0.22%.

Forex Seasonality in British Pound (via GBP/USD)

October is a bearish month for GBP/USD, from a seasonality perspective. Over the past 5-years, it has been the fourth worst month of the year for the pair, averaging a loss of -0.60%. Over the past 10-years, it has been the seventh month of the year, averaging a gain of -0.03%.

Forex Seasonality in Japanese Yen (via USD/JPY)

August is a very bullish month for USD/JPY, 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 +0.59%. Over the past 10-years, it has been the second best month of the year, averaging a gain of +0.98%.

Forex Seasonality in Australian Dollar (via AUD/USD)

October is a mixed month for AUD/USD, from a seasonality perspective. Over the past 5-years, it has been the second worst month of the year for the pair, averaging a loss of -0.96%. Over the past 10-years, it has been the third best month of the year, averaging a gain of +0.79%.

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

October is a mixed month for NZD/USD, from a seasonality perspective. Over the past 5-years, it has been the third worst month of the year for the pair, averaging a loss of -1.21%. Over the past 10-years, it has been the fifth best month of the year, averaging a gain of +0.42%.

Forex Seasonality in Canadian Dollar (via USD/CAD)

October is a very bullish month for USD/CAD, from a seasonality perspective. Over the past 5-years, it has been the best month of the year for the pair, averaging a gain of +1.37%. Over the past 10-years, it has been the fifth best month of the year, averaging a gain of +0.38%.

Forex Seasonality in Swiss Franc (via USD/CHF)

October is a very bullish month for USD/CHF, from a seasonality perspective. Over the past 5-years, it has been the best month of the year for the pair, averaging a gain of +1.2%. Over the past 10-years, it has been the fourth best month of the year, averaging a gain of +0.42%.

Forex Seasonality in US S&P 500

October is a mixed month for the US S&P 500, from a seasonality perspective. Over the past 5-years, it has been the worst month of the year for the index, averaging a loss of -1.48%. Over the past 10-years, it has been the fourth best month of the year, averaging a gain of +1.65%.

Forex Seasonality in Gold (via XAU/USD)

October is a slightly bullish month for gold (XAU/USD), from a seasonality perspective. Over the past 5-years, it has been the eighth best month of the year, averaging a gain of +0.16%. Over the past 10-years, it has been the seventh best month of the year, averaging a gain of +0.25%.

— Written by Christopher Vecchio, CFA, Senior Strategist