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How does the US Dollar typically fare in September?

Week Ahead: Hawkish "Fed speak" may lift USD Index to fresh two-year high

Over the past 5 years, September has been the benchmark Dollar index’s second-best month of the year!

Since 2017, this month has seen an average monthly gain of 0.9% for DXY, second only to February’s 0.99% average climb.


Here’s how the greenback has fared historically against its major peers over the past five Septembers (2017-2021):

  • USDJPY: The Japanese Yen is typically the worst-performing DXY constituent for the month.
    JPY sees its largest monthly drop against the US dollar for the year in September, at a whopping average of 1.43%!
    That’s far higher than second-placed June’s 0.86% monthly decline

  • EURUSD: Euro typically weakens against the US dollar this month by 1.06% on average.
    The shared currency’s woes in recent years are in stark contrast to the longer-term context, with the world’s most-traded currency pair enjoying an average September gain of 0.60% over the past 30 years.

  • GBPUSD: The Pound has had mixed fortunes, with a negligible drop of just -0.03% on average.
    The Septembers of 2017-2019 registering monthly gains that offset the monthly declines over the past two straight Septembers.


Note that EUR and JPY are the two largest constituents of the benchmark Dollar index, making up a combined 71.2% of the DXY.

Here are the weightings of the currencies that make up the benchmark DXY:

  1. Euro (EUR) = 57.6%
  2. Japanese Yen (JPY) = 13.6%
  3. British Pound (GBP) = 11.9%
  4. Canadian Dollar (CAD) = 9.1%
  5. Swedish Krona (SEK) = 4.2%
  6. Swiss Franc (CHF) = 3.6%

Hence, the seasonal declines for EUR and JPY are enough to offset Sterling’s relatively resolute performance in recent Septembers, pushing the DXY up higher.


Now onto a forward-looking note, this month is set to be no different from the 5-year trend.

The US dollar is expected to register further gains in September 2022, even as DXY now trades around its highest levels in 20 years.


And here’s what markets are forecasting may happen for the US dollar versus its major peers by the end of this month:

  • EURUSD: 59% chance of hitting 0.985
  • USDJPY: 70% chance of reaching 141.0
  • GBPUSD: 87% chance of touching 1.15


For brevity’s sake, we shall keep the fundamental outlooks for these respective major currencies for future articles (do keep checking our Daily Market Analysis page for the key events and reasons that move FX markets).

Suffice to say that, as we enter this new month, it’s rather evident from a fundamental perspective that the US dollar is at least set to remain well-supported in the lead up to Q4, at the expense of the rest of the FX world.




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