April seasonal FX trade scorecare

Author: Adam Button | Category: News

At the beginning of April we outlined 5 seasonal patterns for the month along with some trade ideas. Well, April is over and here’s how the trades went:

#5: The dollar bears come out of hibernation

What we said:

The average decline in the Dollar Index is April is 1.1%, the worst of any month.

What happened: The US dollar slumped, losing ground against all the G8 currencies except NZD and the Dollar Index fell 0.8%.

Verdict: Dollar shorts were a great start to any trade in April.

#4: The euro springs in Spring

What we said:

April has been the best month for the euro, on average since inception.

What happened: The euro gained 0.7% in April.

Verdict: EUR/USD hit a hiccup at the ECB decision, which is something we warned about, but quickly rebounded. I thought we could get to 1.40 but, alas, the ECB won’t have it.

#3: Stock the equity market shelves

What we said:

April is the best month for the S&P 500, averaging a 2.6%.

What happened: The S&P 500 gained 0.6%

Verdict: It was a rough ride in the stock market with the mid-April swoon but if you believed in the seasonals you might have bought the dip. I also noted that I particularly liked the Italian MIB and it gained 1.2%.

#2: Take a ride on the cable car

What we said:

April is by far the best month for the pound with an average gain of 2.17% including gains in 9 consecutive years.

What happened: Make it 10! The pound was the best performing G8 currency in the month, cable gained 1.3% and is at a 4-year high.

Verdict: I said cable in April was a seasonal pattern to make you drool and also pointed out that the fundamentals aligned nicely. Here we are at a fresh 4-year high today.

#1: Commodity velocity

What we said:

Commodity currencies are like a magic trick in April… pick a card, any card. It’s the best month for CAD, NZD and AUD.

What happened: AUD +0.25%, CAD +0.81% and …… NZD/USD -0.53%

Verdict: So close to a perfect score. Damn you kiwi! But this one is better than it looks, AUD/USD was up 2.1% mtd on April 10 and CAD was up 1.7%. The CRB commodity index gained 1.6%. Maybe the late-month selling in the commodity currencies was a front-run on a seasonal trade in May (hint, hint).

I’ll have this month’s seasonal patterns up ASAP and, lemme tell ya, there are some doozies.

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