Is there a “most volatile” month in FX?

It’s natural to look for patterns in currency markets. If certain months tend to see more activity, it can feel tempting to plan FX decisions around the calendar.

The problem is that FX risk doesn’t work that way.

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There is no single “most volatile” month.

There isn’t one month that consistently produces the biggest FX moves every year, across all currencies.

Currency markets don’t move because the calendar tells them to. They move because of interest rate decisions, economic data, policy announcements, positioning, liquidity conditions, and unexpected events.

Trying to manage FX risk by predicting when volatility will occur is unreliable. Seasonality can provide background context, but it isn’t a strategy.

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Some months do show patterns in historic data.  

While there is no rule, long-term FX data does show that certain months tend to behave differently on average, depending on the currency pair.

• September and October
  Historical studies across major currency pairs often show higher average price movement in the northern hemisphere’s early autumn. This is commonly linked to the return of liquidity after the summer, portfolio rebalancing, and renewed central bank activity.

• July and August
  Summer months typically see lower trading volumes. While average volatility may be lower, thinner liquidity means prices can sometimes move sharply on relatively small flows.

• December
  December does not consistently rank as the most volatile month by price movement alone. However, liquidity conditions change, trading volumes fall, and year-end flows become more dominant. This can make FX behaviour less predictable, even if headline volatility measures are not the highest.

These are long-term tendencies observed in historical data, not rules, and not consistent across all currency pairs or time periods.

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What actually drives FX risk for business?

For most businesses, FX risk doesn’t increase because a certain month is “volatile”.

It increases when exposures, timing, or assumptions change without being noticed.

Invoices move, cash-flow timings change, budgets reset, forecasts are revised, and existing hedges mature or are replaced.

Those changes often matter more than whether the FX rate itself has moved.

Instead of asking “Is this a volatile month?”, more useful questions are:

• Has our FX exposure changed since we last reviewed it?

• Do our hedge ratios still reflect current forecasts and cash flow timing?

• Have invoicing or payment schedules shifted materially?

• Do we know when our existing hedges end and what cash impact that creates?

• Are we reviewing FX risk regularly, or only when markets move?

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Seasonality is useful context, but it isn’t a strategy.

Effective FX risk management comes from having an end-to-end process that combines a clear FX policy with live visibility over exposure, hedges, timing and liquidity.

When policy sets the rules, and data shows you when those rules are being tested, decisions become simpler. You’re not reacting to headlines or debating instincts; you’re responding to facts within a framework that’s already agreed.

That combination of policy, visibility and ongoing review is what gives finance teams real control, and makes it easier to make the right FX decisions consistently, in every month of the year.

If you’d like to explore how this applies to your own FX exposure, we’re here to help.

https://www.tenora.com/contact-us

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