What does the Chinese year of the dog mean for the forex market? A historical look

Technical Analysis

Author: Adam Button | year-of-the-dog

How has the forex market performed in the year of the dog in the past?

Friday is Chinese new year and that means the end of the year of the rooster and the start of the year of the dog as part of the 12-year cycle. I'm not one to believe in this sort of thing, but let's have a bit of fun.

The last year of the dog ran from January 29, 2006 to February 18, 2007. During that time the pound was the top performer and the Japanese yen lagged. 

The previous dog year ran from Feb 10, 1994 to Jan 31, 1995. In that period, the pound was also solid as it gained 9% against the US dollar but it was a middling performer overall, with the Swiss franc easily leading the way.

Continuing the look back, the year of the dog also ran from January 25, 1982 to February 12, 1983. Unlike the following two years of the dog, it was a rough time for cable as from 1981 to 1985 it fell every year in a swan dive to 1.15 from 2.40.

In that year of the dog, the US dollar was the top performer

  • GBP -16%
  • AUD -12%
  • NZD -10.3%
  • JPY -2.4%
  • CAD -2.3%

So is there any FX market pattern in the year of the dog? Not really. The only one that I can see is that the Canadian dollar has fallen in each of the prior three years of the dog.

Before that, we're into the era of Bretton Woods and US dollar convertibility to gold. However that year the Canadian dollar was particularly strong.

As for stock markets, 2006 was a good year but came just before the crisis. Meanwhile, 1994 was a rare down year just before the start of an incredible run through 2000. In 1982, stock markets struggled for most of the year before surging starting in August and continuing through the following April for a 60% gain.

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