March foreign exchange seasonals: The tailwinds proceed to blow on a number of fronts

Over the lengthy haul, there’s some alpha to be generated with the assistance of seasonals however February was additionally a reminder that momentum and fundamentals trump all. I warned initially of the month that February was the worst month of the 12 months for the Nasdaq. Properly that did not grow to be very helpful because the AI increase continued and the NQ rose 5.1%.

Different seasonal trades that I highlighted did higher.

Oil adopted the seasonal pattern (which continues by means of June) with a climb and Chinese language shares rebounded, simply because the Feb seasonals foretold, leaving an interesting-looking candle on the Shanghai Composite month-to-month chart.

Cable additionally adopted the seasonal sample with a reasonable loss whereas the Australian greenback and copper weren’t in a position to capitalize on the seasonal tailwind (although it does proceed to blow by means of March and April).

For China shares, the constructive seasonals proceed in March and April. In reality, most inventory markets have a constructive backdrop for March and the numbers could be higher if not for the rout in March 2020. The hayday really is available in April, which is the strongest seasonal month of the 12 months for the S&P 500 and the MSCI World Index.

On the FX facet, March is the second-strongest month for USD/JPY however in gentle of comments from the BOJ’s Takata, I’d be extra centered on fundamentals.

The euro exhibits some constructive tendencies each towards the US greenback and on the crosses.

Total, it is not an enormous seasonal month however a number of the shine was taken off by COVID in 2020. The actual commerce could also be establishing for April energy, which might coincide with stronger indicators of central financial institution easing.