December forex seasonal scorecard: Almost perfect - ForexLive

The December seasonal trends hit pay dirt

The clock is winding down on December and another great year for seasonal trends. I write about them every month and this year in particular led to winning trade after winning trade. It's fitting then that December's seasonal trade ideas were sparkling.

Here's a recap:

1) The gold trade setup

The seasonal gold trade is just getting underway but I have advocated getting in early for a couple years because this is a well-known trend now and the buying is being front-run. It was good advice with gold bottoming on the first trading day of the month and rising 4% from there.

2) Bias higher in equities

The S&P 500 rose in 8 of the past 11 years heading into 2019 and this will make it 9 of 12. As I noted, the market was overly cautions coming in because of memories of last year's rout but that was an opportunity. There was an early-month hiccup but the index is up 3.15%.

3) Softness in fixed income

December is the worst month for bonds over the past decade and this year was no exception as 10-year Treasury yields rose to 1.93% from 1.78% on Dec 1.

4) Weakness in USD/CHF

This is a bit of a confusing one because it runs counter to the theme of risk appetite but that's what seasonals are all about. It turned out to be a fantastic trade with the pair running into a double top on the final day of November and then falling 300 pips in a straight line.

5) A good month for USD/JPY and Nikkei 225

The 30-pip decline today puts USD/JPY into slightly negative territory in the month while the Nikkei rose 1.6%.

6) Energy trades

This was the one stumble in the seasonals. The Nov-Jan trend of oil weakness hasn't appeared at all this year. No doubt that OPEC+ cuts are the main reason but there are also some real concerns about US shale growth. Natural gas, meanwhile, followed the seasonally weak trend with a 2.8% decline.

7) NZD/USD and NZD/JPY strength

The New Zealand dollar is the top performer this month among the majors while the US dollar and yen are the weakest. The NZD/JPY is a trade I road all month long. The chart showed a breakout after the Oct/Nov consolidation and has cruised higher. Equally impressive is how it has soared through the July high in the past three days.

I'll have the January seasonal report out tomorrow.

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2019-12-30 14:27:46Z
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