September Forex Market: Major Trends, Anomalies, and Historical Data

In the forex market, September is known as the “Month of Major Markets,” where various factors combine to create larger-than-usual price movements. Factors such as interim financial results of companies, major countries’ monetary policy announcements, and increased trading activity following the end of summer contribute to the market dynamics in September. This blog will provide a detailed explanation of the characteristics of the September forex market, anomalies, and past price movement data.

1. Reasons Why September is Called the “Month of Major Markets”

September is regarded as the “Month of Major Markets” in the forex market for the following reasons:

1.1 End of Summer Slump and Market Activation

In September, the U.S. holiday Labor Day marks the end of summer vacations worldwide, bringing investors and traders back to the market. Trading activity, which was sluggish during the summer, begins to pick up in September.

1.2 Interim Financial Results and Repatriation by Japanese Companies

September is also the time for interim financial results for Japanese companies. During this period, companies often repatriate profits and investments from overseas back to Japan, buying back yen and potentially leading to yen appreciation against the dollar. The impact of repatriation due to interim financial results also influences market fluctuations.

1.3 Sustained Trends of September’s Major Markets

If the September market becomes a major market and trends persist, this momentum can continue into October and November. Therefore, observing September’s market movements can help predict the trends for October and November.

For these reasons, September is known as a month prone to significant market fluctuations. Particularly this year, with the continued trend of yen depreciation, it is noteworthy whether Japanese companies will continue to hold onto dollars.

2. Anomalies in the September Forex Market

September is a month with specific anomalies in the forex market. These are trends observed from past data, indicating certain regularities. Factors such as interim financial results and repatriation, the schedule of major countries’ monetary policy announcements, and other elements influence the forex market in September.

2.1 Interim Financial Results and Repatriation

During September, the interim financial results period for Japanese companies often leads to increased conversions of foreign currencies into yen. This increases the demand for yen, often leading to a decline in the exchange rate against the U.S. dollar. Simultaneously, American companies may also repatriate funds held overseas during their financial reporting periods, increasing demand for yen and potentially causing yen appreciation.

2.2 Schedule of Major Countries’ Monetary Policy Announcements

September sometimes coincides with announcements of monetary policies by major central banks. The Federal Reserve (FRB) in the U.S. and the European Central Bank (ECB) may announce changes in interest rates or revisions to quantitative easing policies. These announcements can significantly impact the market, causing currency fluctuations. If the announced policies deviate from market expectations, sudden currency movements can occur.

2.3 Other Factors

September also marks the end of summer vacations and the beginning of new business plans for companies, leading to increased market participation and trading volume. This can make the forex market more active. Additionally, seasonal factors such as increased demand for Japanese agricultural products during the harvest season or pre-year-end selling activities may influence the market.

Due to these factors, specific anomalies can be observed in the September forex market. Investors should consider these factors when devising appropriate trading strategies. However, it is essential to note that past anomalies do not necessarily continue into the future, requiring careful attention.

3. Interim Financial Results and Repatriation by Companies

Interim financial results refer to the performance reports announced by companies in September following their March fiscal year-end. During this period, many listed companies report their half-year economic conditions, influencing the market.

3.1 What is Repatriation?

Companies generally engage in repatriation, converting foreign currencies into yen, in preparation for interim financial results. Repatriation means bringing profits and funds earned overseas back to the home country. This conversion of foreign currencies into yen can impact the forex market.

3.2 Yen Appreciation Pressure During Interim Financial Results

Particularly for export companies, converting overseas sales into yen during interim financial results can lead to yen appreciation. Companies converting large amounts of foreign currencies into yen can disrupt the supply-demand balance, causing yen appreciation.

3.3 Mitigation Effects Due to Increased Hedging Measures

However, with the globalization of forex markets, companies increasingly engage in options trading and forward contracts to hedge forex risks. This has mitigated the yen appreciation pressure during interim financial results, reducing the impact on the forex market.

3.4 Impact on Stock Prices and Investor Interest

Therefore, the impact of interim financial results and repatriation may not be as significant as before. However, the interim financial results announcements can still affect stock prices, so investors need to pay attention.

4. Schedule of Major Countries’ Monetary Policy Announcements

September is considered an important month in the forex market. One of the reasons is the announcements of major countries’ monetary policies. Below is the schedule of monetary policy announcements scheduled for September:

• Tuesday, September 5th, 13:30 – RBA Policy Rate
• Wednesday, September 6th, 23:00 – BOC Policy Rate
• Thursday, September 14th, 21:15 – ECB Policy Rate
• Wednesday, September 20th, 27:00 – FOMC/FRB Policy Rate
• Thursday, September 21st, Time TBD – SARB Policy Rate
• Thursday, September 21st, 16:30 – SNB Policy Rate
• Wednesday, September 21st, 20:00 – BOE Policy Rate / TCMB Policy Rate
• Friday, September 22nd, Time TBD – BOJ Policy Rate
• Thursday, September 28th, 28:00 – BOM Policy Rate

On these dates, each country’s central bank will announce policy rates, and statements and speeches by governors will be made. Market participants and investors are expected to closely monitor these announcements, as they can significantly impact forex market movements.

These monetary policy announcements are crucial for market participants and investors and are expected to significantly impact the forex market. Market interest is focused on the direction of monetary policies, interest rate changes, and easing policies. In particular, the Federal Reserve’s (FRB) policy rate announcement is a point of global attention.

The results and content of these monetary policy announcements can cause market reactions to vary, depending on whether they align with or diverge from market expectations. Market participants must consider this information when formulating investment strategies and predicting forex market fluctuations. However, financial markets are constantly changing, and investments carry risks, requiring careful judgment and risk management.

5. Past Price Movements in September Based on Historical Data

Analyzing past data on September’s forex market movements reveals the following points:

5.1 Movements of USD/JPY in September

• Over the past 20 years, there was no significant bias in the appearance of bullish and bearish candles.
• Over the past 10 years, bullish and bearish candles appeared seven times each, showing a counter-correlation movement.
• With the start of repatriation due to Japanese companies’ interim financial results, there is an expectation for yen appreciation against the dollar.

5.2 Movements of EUR/USD in September

• Data from the past 10 years shows that the movements of EUR/USD in September also had an equal occurrence of bullish and bearish candles.
• There were seven bullish and seven bearish candles, showing a counter-correlation movement similar to USD/JPY.
• USD/JPY and EUR/USD often exhibit strong inverse correlations, meaning that if one pair shows a direction, the other pair tends to move in the same direction.

5.3 Other Currency Pairs

• No significant biases were observed in other major currency pairs.
• Only the NZD/CHF showed a bias with over 14 bullish candles, indicating a 70% bias.
• No significant differences were observed in the occurrence of bullish and bearish candles in other currency pairs.

5.4 Summary

• In September’s forex market, major currency pairs like USD/JPY and EUR/USD showed equal occurrences of bullish and bearish candles.
• Particularly for USD/JPY, the expectation for yen appreciation against the dollar due to Japanese companies’ interim financial results and repatriation requires attention.
• No significant biases were observed in other currency pairs.

Past data is for reference only and does not predict future movements with certainty. When investing or trading, it is essential to consider past data while also comprehensively assessing market conditions and economic indicators from various countries.

Summary

September is considered a month prone to significant fluctuations in the forex market. The main reasons include Japanese companies’ interim financial results, overseas fund repatriation, and major countries’ monetary policy announcements. Past data also shows significant movements in major currency pairs like USD/JPY and EUR/USD during this period. It is crucial to carefully observe the changes in the forex market during this period and formulate appropriate investment strategies. However, past trends do not necessarily indicate future movements. It is essential to make comprehensive assessments of market trends and economic indicators and exercise careful judgment and precise risk management.

Frequently Asked Questions

Why is September called the “Month of Major Markets”?

September tends to see increased market activity due to the end of the summer slump and the repatriation associated with Japanese companies’ interim financial results. Past data indicates that September’s market fluctuations can extend into October and November, hence it is called the “Month of Major Markets.”

What anomalies exist in the forex market in September?

The forex market in September is influenced by factors such as Japanese companies’ interim financial results repatriation and major countries’ monetary policy announcements. These factors tend to cause significant market fluctuations.

How do interim financial results and repatriation affect the forex market?

Companies engage in repatriation, converting foreign currencies into yen in preparation for interim financial results, potentially causing yen appreciation due to supply-demand imbalances. However, increased hedging measures by companies have reduced this impact compared to the past.

How do major countries’ monetary policy announcements scheduled for September impact the forex market?

In September, central banks of various countries announce interest rate decisions and policies. If these announcements differ from market expectations, they can cause significant fluctuations in the forex market. Therefore, market participants need to pay attention to these announcements.