Another really notable trend around this time of the year is USD weakness. This is due to some taxation reasons that regularly see USD flows out of parent US companies into daughter companies around the year-end. So, the USD does tend to be very weak heading into the year-end.
Over the last 25 years, the dollar index has fallen 20 times between Dec 21 and Dec 31. The largest fall has been -2.46% in 2000. The percentage of winning sell trades has been 80%. Will the USD show weakness again this year?
Major Trade Risks: The main risk to this seasonal pattern would be strong risk-off trading that also results in USD strength or any expectations that the Fed will need to keep hiking rates aggressively to combat US inflation.
HYCM clients can access the Seasonax product in order to analyse over 25,000 currency pairs, indices, commodities, as well as individual stocks. Please contact your account manager for a free trial. Certain products & services mentioned herein may or may not be available to all clients depending on which HYCM Capital Markets Group entity their trading account(s) adheres to.