May was a strong month for the US dollar, in line with the seasonal past. The best month for the dollar was added to this year as the dollar index rose 2.5%.
Will Seasonals work again in June?
An old adage in the markets is ‘Sell in May and go’. This is for stock selling and has some support as June is the second weakest month on the calendar after September. The S&P 500 fell 8.7% last June as the market reassessed its inflation path and Fed policy, but before that it had climbed six years in a row in June.
Right now, the market needs some expansion beyond tense AI stocks to maintain momentum, but that won’t come unless data cools and the Fed hits a ceiling.
More generally, June is the second most challenging month historically for the MSCI world index, which has seen an average decline of 0.55% since 2000. last two decades
Will Australian and New Zealand Dollars Rise?
AUD and NZD could warm up, though temperatures are dropping in the southern hemisphere. Both currencies fell in May and AUD/USD is on a four-month streak of losses as central banks lose their appetite for hikes. Historical trends show June as a positive month for the AUD, marking June as the second best month in the last 20 years. The same trend is true for NZD/USD, which saw an average gain of 0.85%.
May is a seasonally weak month for the euro and that was also true this year as it fell from 1.1020 to 1.0675 this year. The picture improves in June, with an average increase of 0.6% over the last 20 years. Last year, the euro fell on energy and war fears, but rose in June on 8 of the last 12 years.
Dollar Days Haven’t Arrived
Dollar Days may be back at your favorite food restaurant, but they’re not in the currency market in June as it’s the third worst month for the US dollar. Maybe we got a taste of it today with a soft regional manufacturing survey and a hint from two Fed officials that they aren’t planning a raise in June. The big start of the month comes with Friday’s nonfarm payrolls and that will set the tone. It surprisingly beat consensus 13 months in a row; Is it time to end the series?
Last Chance for Oil Bulls
Oil has had a rough week, down 8%, and there is little hope in the second half other than stockpile tightening as China slows and OPEC likely hasn’t changed production. On June 7 last year, WTI’s price peaked at $130.50 but bounced back to close the month at $105.76. It is currently trading at $67.95 which is below its early 2022 level. June is the final phase of the quarter that starts in May with strong seasonal tailwinds. Needless to say, these tailwinds haven’t been much help this year.