March was a roller-coaster month for the markets. Sentiment and themes flipped repeatedly, especially with flows dominating the final days of the month as the end of quarter loomed.

The British pound was the top performer of the month, while the Swiss franc and Australian dollar lagged. In the quarter, the Japanese yen led the way, while the Canadian dollar trailed.

Looking ahead, don’t expect a quick return to ‘normal’ markets. Themes tied to geopolitics, trade and inflation uncertainty won’t be resolved quickly.

Seasonality is one item in the toolbox. Theoretically, markets shouldn’t be affected by seasonals, but the past few years increasingly proven otherwise, especially when they align with fundamentals and technicals.

Here are some April Q2 seasonals to keep in mind.

USD’s April Blues

April is the worst month on the calendar for the dollar index over the past decade and beyond. USDX declined in April for the past seven consecutive years, and by an average of 1.26% over the last ten years. The weakness is particularly pronounced against the euro and commodity currencies. That theme dovetails with repeated years of economic data weakness in Q1, which are partly related to shifts/additions in equity/bond indices and re-balancing of seasonal-adjustment issues at US statistics agencies. Whatever the reason, April hasn’t been kind to the dollar.

Energy Perks up

April and May are strong months for oil and natural gas. There is a consistent annual trend of Feb-May strength in energy that peaks in April, with an average gain of 6.5% over the past decade. It then reverses in the final four months of the year. Similar patterns occur in natural gas with strength from April-June, including 8 consecutive Aprils of gains.

We must remind you that no pattern is infallible, as oil declined 2.5% last April. One spot to watch very carefully is Iran and signals from the Trump administration about leaving the nuclear deal or imposing sanctions.

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