In beginning off, Credit score Agricole factors to the notion that the greenback has sometimes carried out poorly in December – noting that the dollar has dropped in ~70% of the final 25 years. The pattern is especially evident in opposition to the CHF whereas the greenback has largely held up solely in opposition to the likes of the JPY and CAD.
Effectively, they are not fallacious as December is the worst performing month for USD/CHF as seen by the seasonal heatmap beneath:
Credit score Agricole notes that year-end weak spot within the greenback sometimes stems from repatriation flows by international traders in USD-denominated belongings, alongside exporters bringing again greenback revenues to their residence currencies.
And paired with the basic backdrop of rising world commerce flows, which generally correlates negatively with the greenback, the agency expects further greenback promoting this 12 months in December. Credit score Agricole factors to those flows being considerably just like what we noticed in Q1 2025 when there was a frontrunning when it comes to US exports earlier than tariffs that triggered unfavorable hedging and repatriation flows within the greenback.
Moreover that, the agency additionally anticipates that document international inflows into US equities and stuck earnings in 2025 ought to enhance year-end revenue repatriation. In different phrases, they anticipate that to contribute to elevated outflows from the greenback earlier than we flip the calendar web page to 2026. All a part of company window dressing in fact, in all chance.
