Let's get straight to it.
On paper, August is the worst month for AUD/USD and pretty much the aussie in general. Over the last 20 years, the pair has fallen in 16 out of the last 20 August months. It's almost the polar opposite of what February typically is for AUD/USD. If you look at AUD/JPY, the trend is rather similar as well:
That might be a bit of an indication that August is typically one of the worst months for risk trades in general. In fact, it's one of the worst months for major indices in Europe. For the DAX, August is the worst performing month seasonally while for the CAC 40, it is the second-worst (only June is worse).
Or if you want to tie things more closely to the yen currency, August is also the second-worst month for the Nikkei (only January is worse). And it is already off to a disastrous start to the month as seen here.
As for USD/JPY though, August has been a bit of a softer month historically. But in recent years, there is a bit of a different pattern emerging:
In the last four years, the pair had risen in June then fallen in July before coming back up in August. So far this year, the pair also climbed in June and fell during July trading. Will we see a bounce in August as such? Of course, things are quite different now with the BOJ having just hiked its policy rate and Japan having intervened in the market last month.
These are arguably the more interesting seasonal patterns for FX in August trading. But there are a couple of other ones to be mindful of in broader markets. Of note, August is usually the worst month for copper.
But I guess you can also tie that to being a poor month for risk in general over the years. And it's definitely not a given as July has been a strong month for copper typically, but last month the metal fell by nearly 4%. Price is now trading inches away from its 200-week moving average at $4.01, so that will also be a key technical level to be mindful of.
And looking to the last 10 years, August also marks one of the best months for 10-year Treasuries i.e. yields falling. So, that's also in part a tailwind associated with the yen currency. And we're already getting to that early on with yields breaking below 4% following the Fed earlier this week.
