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April forex seasonal scorecard: Dare you doubt the seasonal patterns?

How did the seasonal patterns perform in April?

At the start of April, we outlined the forex seasonal patterns to watch in the month. The package outlined five trade ideas generated from historical seasonals. Here is how they did:

#5 Oil longs

For the second year in a row, April has been a graveyard for oil shorts. The fundamentals should have hurt oil, especially the Doha disaster but the seasonal trend was unstoppable.

What we wrote:

Oil averages a 2.4% gain since 2000 in April and a 1.77% gain over the past decade. The OPEC meeting April 17 is the main event on the calendar with some of the top producers looking to implement a production freeze. It's a token gesture and today Saudi Arabia said it will only participate if Iran does as well (and that's not going to happen). Crude prices are down $1.42 to start the month at $36.92 and with some support at $36.00, this may be the spot to wade in.

What happened:

Oil gained almost 20% on the month.

Verdict:

A glorious victory.

#4 EUR/USD longs

What we wrote:

The forex seasonals shine on the euro in April. EUR/USD has averaged a 0.6% gain since inception in April, making it the third best month on the calendar

What happened:

The euro finished 0.72% higher on the month but it was a tough trade. The pair moved straight sideways in the first 10 days of trading in April then dipped nearly 100 pips before a strong finish in the last week of the month.

Verdict:

A win for seasonals, but a tougher one.

#3 Dollar doldrums

What we wrote:

April is the worst month for the US dollar

What happened:

The dollar index fell 1.6% led by a punishing decline in USD/JPY. The Australian dollar was the only currency that didn't gain against the slumping dollar.

Verdict:

I had a hard time believing this one would work out because March had been such a tough month already for the buck, but the seasonals won out. Score another win.

#2 Commodity bonanza

What we wrote:

April is the month with some of the strongest seasonal patterns of the year. The commodity currencies all tend to rip.

What happened:

The Canadian dollar was the second-best performer on the month, climbing a whopping 3.7%. The kiwi gained 1.1% as well. But the Australian dollar struggled. It was higher until late in the month when a soft CPI sent the Aussie sharply lower.

Verdict:

Two out of three commodity currencies were higher and a basket of all three versus the dollar would have done very well. Another win.

#1: Cable

What we wrote:

Cable in April is like the holy grail of seasonal patterns. GBP/USD has gained is April for 11 consecutive years and has only declined once since 2001.

What happened:

Cable dipped in the first week of the month and then stormed higher to a 2.56% gain.

Verdict:

Twelve years a row in cable. That's a trend you don't fight.

Overall verdict

April seasonals were a soaring success even though they didn't pick up the best trade of the month (yen longs). These kinds of returns would have crushed almost any hedge fund in the world.

Check back later and I'll have the May forex seasonals package up. It's a good month for the seasonal trade.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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