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A lot seems to be riding on the final quarter of the year.

  • Will we get a vaccine?
  • Will the global economy continue to show resilience in the face of this near year-long pandemic or will data turn negatively anew amid second wave/lockdown worries
  • Will Biden maintain or even build on his lead in the polls and become next president of the US or will Trump shock all once again and win out or worst case scenario will it be a close call and turn into a contested election?
  • Will the EU and UK agree to a Brexit trade deal?

 

It could be a volatile quarter. So far in Q4, the USD is a near broad loser. Largest losses seen -0.8% SEK and and -1.2% NOK. Only USD gains so far are minimal against YEN at +0.1% currently.

So, how does the DOLLAR tend to perform during the last quarter of the year and are there any G10s that seem to perform particularly well/badly through Q4?

 

IGM FX and Rates 

 

  • Last year, the USD was a big loser. See above, most acute losses came against the -5.1% SEK, -7.6% NZD and -7.9% GBP. Only USD win came against the +0.5% YEN. Again.
  • In Q4 2018, it was a more mixed picture. The USD only lost out against the -0.4% SEK, the -1.5% NZD and -3.7% YEN. Everywhere else on the G10 board, the USD was a winner, most acutely vs the +2.1% GBP, +2.4% AUD, +5.4% CAD and +5.6% NOK.
  • In 2017, mostly USD gains again. Only losses came against -0.9% GBP and -1.6% EUR. The USD was a material winner against +1.5% NZD and +2.9% NOK.

 

IGM FX and Rates

 

  • In 2016, the USD was king. See above, across the board. Largest gains came vs +6.4% EUR, +7.6% NOK and +13.4% YEN.
  • In 2015, again, the USD was mostly a winner. Only USD losses came against the Antipodeans -3.8% AUD and -6.8% NZD. Largest gains came between +2.8%/+2.9% EUR and CHF, +3.7% NOK and +3.8% CAD.


IGM FX and Rates 

  • In 2014, again, across the board USD strength. See above, largest wins +6.5% AUD, +7.6% SEK, +8.5% YEN and +13.8% NOK.
  •  More mixed in 2013, but overall the USD outperformance trend continued. Only USD downside came against the Europeans -1.3% CHF, -1.6% EUR and -2.3% GBP. Material USD gains made vs +3.0% CAD, +4.3% AUD and +6.7% YEN.
  • In 2012, a turn around of sorts. Mostly USD losses, largest between -2.6%/-2.9% EUR, CHF and NOK. Only USD wins came against +0.2% NZD, +0.9% CAD and +10.1% YEN.
  • In 2011, again a mixed picture. Biggest USD losses against -2.1% NZD, -2.8% CAD and -5.7% AUD. Biggest USD wins vs +1.8% NOK and +3.2% EUR and CHF.

 

IGM FX and Rates 

  • Ten years ago, it was mostly USD losses, largest -5.1% CHF, -5.8% AUD and -6.3% NZD. See above, only USD wins came against the +0.7% GBP and +1.8% EUR. 
  • 2009 was a mixed bag. Largest USD losses came against the -1.6% CAD and -1.7% AUD. Largest USD wins came via the +2.2% EUR, +2.8% SEK and +3.6% YEN.

IGM FX and Rates

  • 2008 coincided with the GFC and big USD losses vs other havens -5.0% CHF and -17.1% YEN. See above, large USD gains everywhere else through to +15.7% NOK and +18.0% GBP.
  •  2007 was back to mixed, incl USD losses against those havens -2.7% CHF and YEN. Material USD gains +0.9% NOK, +1.4% AUD and +3.0% GBP.
  • In 2006, mostly USD downside and in fair size. From -2.5% CHF through to -5.7% AUD, -7.1% SEK and -7.8% NZD. Sole USD gains came via the +0.7% YEN and +4.1% CAD.
  • Fifteen years ago, only -0.1% USD losses vs CAD prevented it being a positive USD whitewash. Largest USD upside found against +2.9% NOK, +3.6% YEN and +3.8% AUD.
  • In 2004, the USD was a loser across the board. Big ones too, from -4.9% CAD through to -9.0%/plus EUR, SEK and CHF and largest was against the -10.3% NOK.

 

IGM FX and Rates

  • In 2003, same again. The USD was sunk against all G10s. From -4.0% YEN through to -8.1% EUR, 10.2% NZD and -10.6% AUD.
  •  In 2002, a hat-trick of broad USD losses. From -1.0% CAD through to -6.6%/plus against SEK, CHF and NOK up to -11.9% NZD.
  • In 2001, a welcome return to some USD strength. Only losses came against -2.0% SEK, -2.5% NZD and -3.7% AUD. Largest USD wins came against the +2.4% EUR and CHF and +9.2% YEN.
  • For good measure, twenty years ago, it was the start of the early noughties trend of Q4 USD losses. Most acute ones came against -6.8% EUR, -7.1% CHF and -8.9% NZD. Only USD win came against the +5.5% YEN.

 

Well, we can see that 15-20 years ago, it was a good best to short the DOLLAR. More recently, we have seen strength.

Q4 seasonality this year could come second to those above potentially big drivers, but BEARS might want to look at a LONG AUD/USD (but of course the RBA could well cut rates before the year is out). See below, the last 20 years has seen an ave of +0.9% during Q4.

IGM FX and Rates

However, USD BULLS might consider a LONG USD/NOK. An ave win of +1.4% since 2000. Obviously, it would have been even more if it were not for those early years moves!

IGM FX and Rates


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