We mentioned last week the short term potentialities of emerging currencies, but some other clues are coming this week too. One of these is certainly the seasonality factor. As we can see from the graph, the seasonality of the Jpm Emerging Local Currency Index, from late January to late April has opened a seasonally favorable window, which should culminate with a top at the end of April before a correction of about a month and a half and a new seasonal increase from mid-June until early August where the bullish boost should temporarily run out, just before one of the worst time for emerging currencies that will only end in late October.
Obviously this is only statistical, but we point out how the market is tracing the seasonal pattern. So April is the best month of the year, followed by the month of July.
As we can be seen from the image, in the last 10 years. the fourth month of the year has closed averagely upward for emerging currencies of 1.10% (also during the black year 2013 ) followed by an average +0.98 % in the month of July (chart source: Bloomberg )
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