FOREX: EURUSD Seasonality Pattern Flips In January
Jan-02 12:20
- Attempts above the 1.1800 handle in EURUSD across December have proved short-lived, with the pair tracking back towards 1.17 in most recent trade. Despite this, December’s 1.28% gain marks 17 of the last 25 Decembers with a sequentially higher close, confirming the directionally largest USD seasonality pattern of any month across EUR, JPY, and GBP.
- This seasonality historically flips in January, with an average 0.7% loss observed in the pair over the last 25 years. While not guaranteed in any year, factors potentially bolstering bearish EURUSD seasonality in January may include fresh long-setting in US equities as analysts are almost universally bullish on the S&P 500's prospects in 2026. This is despite some remaining questions around sustainability of AI and AI-adjacent companies' valuations, with increasing scrutiny on the profitability of substantial capex investments.
- Standard Chartered meanwhile flag this morning that December G10 FX moves have tended to reverse in January of the following year, with reversals having been most pronounced in the AUD and NOK.
- From a fundamental perspective, a key near-term focus for EURUSD will be the announcement of the new Fed chair, with Hassett consolidating a lead over the holiday period according to prediction markets, but Warsh and Waller also seen as plausible choices. For techs, the breach of the 20-day EMA at 1.1724 will be monitored as a clear break would signal scope for a deeper retracement, allowing an overbought condition to unwind.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
US DATA: New Purchase Mortgage Applications See Fresh High Since Early 2023
Dec-03 12:19
New purchase mortgage applications extended their recent push higher in contrast to a further rolling over in refi activity, offering scope that recent cautious optimism for existing home sales might have continued in the near-term.
- MBA composite applications fell -1.4% (sa) last week after 0.2%, essentially two weeks of little change for the volatile series, but new purchases again outperformed refis in another update where the details are more interesting than the headline suggests.
- New purchase applications increased 2.5% last week after 7.6% the week prior, maintaining their highest level since Feb 2023 after what is now an 18% increase since mid-Oct.
- In contrast, refi applications fell -4.4% after -5.7% and are down a cumulative 14% over the same period since mid-Oct for their lowest level since early September.
- Putting these moves into context, composite applications are at 65% of 2019 levels, new purchases still only at 72% and refis at 60%.
- The refi drop was a little more surprising in light of an 8bp decline in the 30Y mortgage rate in a move that mostly offset a 10bp increase over the previous four weeks.
- Mortgage swap spreads were little changed on the week having recently widened slightly but still at low levels by recent standards. The spread to 10Y swap rates held at 273bp having recently troughed at 267bp for its lowest since Apr 2022, but is still below the average 285bp in Q1 and a rough range of 300 +/-5bp for some months after reciprocal tariff announcements in April prompted more cautious lending standards.
US TSYS: Extending Highs
Dec-03 12:12
- Treasury futures extend the top end of the overnight range, no particular headline driver as markets await ADP private employment data (monthly) at 0815ET.
- Currently, TYH6 trades 113-03 high (+6.5), initial technical resistance above at 113-11/22+ High Dec 1 / High Nov 25, key resistance and bull trigger at 113-29+, the Oct 17 high.
- Curves mildly mixed: 2s10s -.473 at 56.968, 5s30s +.679 at 109.546.
EGB OPTIONS: Schatz Call Fly
Dec-03 12:07
DUF6 106.90/107.00/107.10c fly, bought for 2.5 in 5k.
