SEB Research presents a monthly recommendations on FX baskets constructed to take advantage of seasonal patterns.
"For January we recommend buying a seasonal basket which is long NOK (50%), SEK (25%) and JPY (25%) versus short CAD (50%) and EUR (50%). Over the past five years such a basket has on average gained 2.3% with a max of 5.2% and min of 1.0% and would only have posted a loss once in the past 10 years," SEB notes.
"So far in 2019, the above suggested seasonal FX basket is +0.2%. An attribution analysis reveals that it is the CAD that has been strong in January rather than following its usual depreciation pattern. One reason is the increase in oil prices but it could also partially have had to do with the Bank of Canada rate decision held on 9 January. As widely expected they kept the rate unchanged but the policy statement was slightly on the dovish side highlighting concerns for the economy. Thus, now could be the time when the tide has turned and the CAD resumes its usual depreciation pattern," SEB adds.