Forex seasonals for June
In April, we talked about US dollar weakness and in May it was all about US dollar strength. The seasonal patterns played out well in the Spring but it's June now and the forex seasonals look at bit different. For starters, the trends and patterns this month aren't as notable or as strong as April and May. That means we had to look a bit deeper for trends.
In any case, here are four June 2015 seasonal trends to watch for:
1) Mild GBP strength
June and July are two of the top months for cable.
The pound is stuck in a two week downtrend and has erased the post-election gains. But support is nearby at 1.5100 and could spark some consolidation in the 1.5100 to 1.5500 zone.
2) Better days ahead for AUD
The June-July period is also a better time for the Australian dollar as it leaves a wretched two weeks behind. Last week's CAPEX report was dismal but the positive tone in China will eventually help to lift Australia.
3) Stocks on the rocks
I don't like how the S&P 500 reacted on the latest break to record highs. All signs pointed to a fresh leg of strength in May but the market is jittery about Fed hikes along with USD strength. Yellen will likely grow increasingly hawkish and that leaves the S&P 500 in a tough spot.
In the past 30 years, June is the third worst month on the calendar but just looking back at the past decade, it's easily the worst.
4) Oil the gears
The standout seasonal trend in June is oil strength. I'm a major oil bear but the seasonals, along with the three candle reversal that was completed on Friday preach caution.
June and July are two of the better months for crude, especially over the past decade. Ultimately, oversupply will be the dominant driver of crude prices but not quite yet.