In starting off, Credit Agricole points to the notion that the dollar has typically performed poorly in December – noting that the greenback has dropped in ~70% of the last 25 years. The trend is particularly evident against the CHF while the dollar has largely held up only against the likes of the JPY and CAD.
Well, they’re not wrong as December is the worst performing month for USD/CHF as seen by the seasonal heatmap below:
Credit Agricole notes that year-end weakness in the dollar typically stems from repatriation flows by foreign investors in USD-denominated assets, alongside exporters bringing back dollar revenues to their home currencies.
And coupled with the fundamental backdrop of rising global trade flows, which typically correlates negatively with the dollar, the firm expects additional dollar selling this year in December. Credit Agricole points to these flows being somewhat similar to what we saw in Q1 2025 when there was a frontrunning in terms of US exports before tariffs that triggered negative hedging and repatriation flows in the dollar.
Besides that, the firm also anticipates that record foreign inflows into US equities and fixed income in 2025 should boost year-end profit repatriation. In other words, they expect that to contribute to increased outflows from the dollar before we turn the calendar page to 2026. All part of corporate window dressing of course, in all likelihood.
This article was written by Justin Low at investinglive.com.