U.S. Dollar Books 7th Consecutive May Gain

For the fourth year in a row, traders subscribing to the old Wall Street adage “sell in May and go away” are off to a rough start. Barring a massive Tuesday selloff, the S&P 500 is on pace to finish the month of May up about 1.4 percent.

While most of the “sell in May” crowd has missed out on some gains in recent years, one group has quite a May winning streak going: buyers of the U.S. dollar.

Related Link: Sell In May? Averages For The Month Haven't Declined In 4 Years

With the Federal Reserve likely to raise interest rates in June, the dollar is on track to finish the month up 3.4 percent according to Bloomberg’s Dollar Spot Index, which tracks the dollar against 10 other major currencies.

The futures market is currently pricing in a 57 percent chance that the Fed will raise interest rates in June from 0.25 percent to 0.5 percent.

This year’s May gain will mark the seventh consecutive year that the dollar has finished the month higher.

The U.S. dollar is on track to finish May up 4.4 percent versus the yen, up 2.5 percent versus the euro and up 4.8 percent versus the Australian dollar.

Despite the May strength, the PowerShares DB US Dollar Index Bullish (NYSE: UUP), which is down 3.3 percent in 2016, has severely lagged the SPDR S&P 500 ETF Trust (NYSE: SPY) year-to-date.

Disclosure: The author holds no position in the stocks mentioned.