Updating a Note Posted in December 2015 on Yearend Seasonality of the Dollar

December 16, 2019

In the early years after the United States adopted flexible dollar exchange rates in March 1973, the U.S. currency an astonishingly consistent pattern of depreciation against the mark during the second half of each December, dropping in thirteen out of fourteen years in one stretch. Like the euro now, the  mark was then Europe’s predominant currency, setting the tone for other monies in the region. An article I posted on December 28, 2015 documents this phenomenon in some detail. Also observed in that update is the fact that this pattern had become far less consistent subsequently. From the early days, this propensity to be weak in late December tended to be reversed at the start of January, and that early-year strength more recently had continued to be observed more consistently than weakness in late December.

Four more years of data, 2015, 2016, 2017 and 2018 are now available since the update in late 2015 was written.

  • In 2015, the dollar rose 0.5% against the euro between mid-December and yearend but then fell 0.4% between the start of January and January 15, 2016. This see-sawed movement is opposite in direction to what occurred so often in the 1970s and 1980s.
  • In 2016, the dollar fell by 1.1% against the euro each both in the second half of December and the first half of January 2017.  This too failed to conform to the historically most prevalent result. While weakness in late December returned to the dollar, it failed to reverse direction immediately after the calendar year had turned.
  • In 2017 during the period from December 15th to yearend and then on to mid-January, the dollar traced a similar pattern to that in 2016. It fell 2.1% against the euro in late December and then slumped an identical 2.1% in the first half of January. The historical pattern reemerged in late December but failed emphatically to reverse course once the year turned.
  • Last December saw the dollar lose 1.2% against the euro in the second half of the  month and then recoup a mere 0.3% in the first half of January.

Copyright 2019, Larry Greenberg. All rights reserved. No secondary distribution without express permission.



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