Canadian Dollar: April is a Good Month

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Data going back as far as 1971 shows the Canadian Dollar tends to benefit from strong seasonal dynamics in April.

April is an interesting month in global foreign exchange owing to its strong and usually predictable outcomes.

Seasonality is particularly strong for the British Pound, which tends to advance against the Dollar and Euro, helped by dividend payment dynamics in the UK at this time.

But the Canadian Dollar is another currency that shows strong seasonal dynamics.

Matthew Weller, Global Head of Research at Forex.com, says "going back to 1971, April has been by far the most bearish month for USD/CAD."

According to Weller, the Canadian Dollar experienced an average gain of more than 0.5% over this period.

"As of writing, USD/CAD is probing its highest levels since last November near 1.3600, so it will be interesting to see if that resistance level caps rates over the next month," says Weller.

Image courtesy of Forex.com.

Looking elsewhere in FX, the Australian dollar is another currency pair that is tracking its long-term seasonality closely so far in 2024.

"The pair fell in both January and February and as of writing, is on track to finish March near unchanged. With that as the backdrop, April has historically been the second most bullish month for AUD/USD, with average returns of 0.38% since 1971," says Weller.

Image courtesy of Forex.com.

Regarding the Pound, GBP/USD has historically seen its strongest bullish performance of any month in April, with average returns in excess of 0.6% since 1971.

"Through the first three months of the year, GBP/USD has been following its historical seasonality to a “T”, with losses in January and February and March tracking toward a roughly flat month, so this will be a key pair to watch in the coming month," says Weller.

Image courtesy of Forex.com.

"The beginning of a new month marks a good opportunity to review the seasonal patterns that have influenced the forex market over the 50+ years since the Bretton Woods system was dismantled in 1971, ushering in the modern foreign exchange market," says Weller.

The analyst cautions these seasonal tendencies are just historical averages, and any individual month or year may vary from the historic average, so it’s important to complement these seasonal leans with alternative forms of analysis to create a long-term successful trading strategy.