July forex seasonals: It's a tough one for USD/JPY

Forex seasonal for July

Seasonal trades were a mixed bag in June. The US dollar defied the usual seasonal weakness and was the top performer however global stock markets delivered the usual weakness.

In July, a strong recent pattern in USD/JPY weakness. In the past 10 years, the average decline has been 1.26%, by far the weakest of any month. The pair has also fallen in 7 of the past 10 years.

If you'd like a catalyst, look no further than global trade worries.

The habit of yen strength coincides with the seasonal patterns pointing to lower bond yields and heightened volatility in July.

Another trend to watch out for is base metals strength but that certainly runs counter to the weakness in trade.

Overall, it's also a good month for global equities, particularly in Europe.

We also start the annual trend of oil weakness in H2 but note that last year's second-half rally completely ran against that seasonal pattern.