Forex seasonals for October
October isn't the most exciting month for seasonal patterns but there are a few standouts. This year the market has largely followed the seasonal script. Some big months for seasonals are upcoming in November and December but for now calendar traders should look to hit singles rather than home runs.
1) October is the second-best month for USD/CAD, averaging a 1.01% over the past 10 years.
The Canadian dollar finished September on a rebound but it was a tough month for the loonie. USD/CAD rose to an 11-year high yesterday and decent growth numbers today do little to change the picture.
2) October is a mildly strong month for the Australian dollar. On the commodity FX trade, it's the best month for AUD/CAD longs. Fundamentally, you could make case for the trade based on some type of bounce in China and a continued decline in crude prices.
3) Watch Vol. Volatility for the year historically peaks in October. Stocks are finishing September strong but that's about portfolio rebalancing. There is a pervasive feeling that one more big blowoff could be coming in stocks before the traditional Nov-Dec rally.
4) Look for oil to remain in the doldrums. October is the second worst month for WTI as part of a dismal three month stretch. September is the worst month and November is third-worst. US inventories today were unexpectedly large although that was balanced by a 200k barrel per day decline in OPEC production, according to a Bloomberg survey.
WTI seasonal heatmap:
For the euro, pound and yen, October is an average month.
