Seasonal workers are not a good idea this month
There are times when the seasons are a precious part of the forex toolkit. It is not one of those moments.
Economic and coronavirus news will overwhelm all seasonal trends. That said, April is generally one of the strongest months for models.
Here are 4:
1) Cable springs in spring
Sterling is the king of April, or at least it was until recently. Cable recorded an average gain of 1.97% over the past decade over the past decade. It has been won in 13 of the last 15 April. The only problem? The last two April posted decreases of 1.8% and 0.02%, respectively.
2) The dollar index struggles
The other side of the cable business is also in the spotlight in April. The US dollar index tends to struggle in April. In fact, it was the worst month in the past decade with a decline of 1.1%. This may be linked to repatriation flows.
3) Dances in Canadian dollars
The ice melts in April and the loons return to the lakes. It traditionally marks a very strong month for the Canadian dollar with an average gain of 1.77% over the past decade – the largest of all months. This coincides with a jump in demand and oil prices in April. I would not bet on this part of the trend that continues this year.
4) Natural gas savings
Natural gas is a highly seasonal product and it is very attractive at the moment. It has held up much better than oil in the past two months, but is at its lowest level in the long term. Where it gets interesting is in the long term. US energy companies will go bankrupt at a staggering rate in the coming months and that will mean much less gas production. If you look at the curve, there is a huge contango in natty. What does this mean for the first month of April? Not much, but it is more valuable information than what you will get in any season.