CAD - A1 Trading Company

As the fiscal year comes to a close, consumers will likely finish shopping for the holidays, and traders and investors will get some respite thanks to a long weekend due to bank holidays around the world. While concerns about further stock market selloffs may be lingering in the minds of some, a promising set of assets is likely flying under most retail traders’ radar: Kiwi Dollar pairs. NZD has retained incredible strength in recent months, owed primarily to a remarkable New Zealand economy and a hawkish central bank; despite few bits of recent or upcoming news that could become fundamental catalysts, the New Zealand Dollar remains highly esteemed by the EdgeFinder. As we consider trade setups for the near future, it is worth asking: could NZD currently be the best currency to buy?

Three Pairs to Watch

According to the EdgeFinder, which provides nuanced supplemental analysis for traders, some of the pairs that earn the strongest biases are still NZD pairs. For those who are bullish on the Kiwi Dollar and interested in finding potential trade setups, the following pairs are well worth monitoring. They are listed below in order of signal strength, along with their respective ratings, signals/biases, and corresponding charts.

1) GBP/NZD - Earns an ‘-9’ Rating, or a ‘Strong Sell’ Signal

2) AUD/NZD - Earns an ‘-8’ Rating, or a ‘Strong Sell’ Signal

3) NZD/CAD - Earns an ‘5’ Rating, or a ‘Buy’ Signal

As many readers are aware, the EdgeFinder, A1 Trading’s market scanner, can be incredibly helpful in the process of discerning which assets are worth watching for potential trade setups. Whether someone is planning on buying or selling currency pairs, commodities, indices, or more, EdgeFinder analysis is so holistic that its ratings and biases can be a go-to supplement for bulls and bears. However, one feature of the EdgeFinder’s that is rarely mentioned, yet quite meaningful, is its generation of ‘0’ ratings and ‘Neutral’ biases. Most days, there is a small handful of assets that earn these reviews; rather than being irrelevant, these ratings can be quite beneficial to keep in mind, as they alert traders to a high level of uncertainty. With that in mind, here are 3 pairs to avoid (for now), as they currently earn such ‘0’ ratings, warranting caution.

1) AUD/CAD - Earns a ‘0’ Rating, or a ‘Neutral’ Signal

2) NZD/USD - Earns a ‘0’ Rating, or a ‘Neutral’ Signal

3) GBP/CAD - Earns a ‘0’ Rating, or a ‘Neutral’ Signal

As another dense news week draws to a close and financial markets continue to react to the latest flurry of interest rate hikes around the world, it can be helpful for traders to recenter on key biases. Before the weekend fully arrives, let’s check in with the EdgeFinder, A1 Trading’s market scanning software, to take note of the various ‘strong’ signals that have been generated in preparation for next week. The following list is composed of the 5 strongest pairs to trade according to EdgeFinder analysis: they are listed with their respective ratings, signals/biases, and corresponding charts. Additional fundamental and technical commentary will be provided accordingly.

1) USD/CAD - Earns an ‘8’ Rating, or a ‘Strong Buy’ Signal

2) NZD/CAD - Earns a ‘6’ Rating, or a ‘Strong Buy’ Signal

3) EUR/JPY - Earns a ‘6’ Rating, or a ‘Strong Buy’ Signal

4) AUD/NZD - Earns a ‘-9’ Rating, or a ‘Strong Sell’ Signal

5) GBP/NZD - Earns a ‘-9’ Rating, or a ‘Strong Sell’ Signal

Tomorrow morning at 8:30 am ET, the United States Bureau of Labor Statistics is scheduled to release the latest Consumer Price Index (CPI) data for the month of November. Widely considered a proxy for inflation, the rate at which CPI increases will help the American public and the Federal Reserve discern how much of a threat high inflation continues to pose. Month-over-month CPI is forecast to slow to a 0.3% increase, while month-over-month Core CPI (which excludes volatile food and energy prices) is anticipated to clock in at 0.3% as well. If the real numbers exceed these expectations, this would be bullish news for USD and bearish news for stock market indices, whereas the inverse would be true if the numbers come in smaller. This is because hotter inflation data gives the Fed further incentive to raise interest rates to cool the economy, which strengthens the Greenback while diminishing demand for stocks. With the Fed’s next rate hike and press conference coming just two days from now, we must issue a warning: US CPI tomorrow is just the beginning for major pairs and equities.

Three Pairs to Watch

Considering that the latest Producer Price Index data released last week was quite bullish for USD, it seems plausible that tomorrow's CPI updates could yield similar results. With this in mind, for those interested in going long on USD, here are three potential pairs to watch for trade setups. While the EdgeFinder, A1 Trading’s handy market scanner, is reasonably cautious about some of them, new momentum from a fundamental catalyst could correlate with new biases being generated which are more optimistic for US Dollar bulls. They are listed below with their respective ratings, signals/biases, and corresponding charts.

1) USD/CAD - Earns a ‘6’ Rating, or a ‘Strong Buy’ Signal

2) USD/JPY - Earns a ‘1’ Rating, or a ‘Neutral’ Signal

3) AUD/USD - Earns a ‘-1’ Rating, or a ‘Neutral’ Signal

As the Swiss National Bank (SNB) gears up for a likely new interest rate hike on Thursday, December 15th, financial markets will be watching. Chairman Thomas Jordan of the SNB has made these hawkish intentions clear repeatedly; this contractionary agenda would be the continuation of Switzerland’s recent departure from ultraloose monetary policy. Negative interest rates had been a years-long precedent for the central bank prior to the SNB’s shocking pivot towards tightening over the course of 2022, as high inflation grips the global economy. These rate hikes contribute to a greater valuation for the Swiss Franc, which already displays impressive fundamentals thanks to the stability of Switzerland’s economy. This reflects in the EdgeFinder’s positive analysis of the currency, which has aided in generating several new signals for CHF pairs; they are listed below with their respective ratings, signals/biases, and corresponding charts. As potential trade setups emerge over the coming week, it is worth asking: is it time to buy CHF?

1) CHF/JPY - Earns a ‘5’ Rating, or a ‘Buy’ Signal

2) AUD/CHF - Earns a ‘-4’ Rating, or a ‘Sell’ Signal

3) CAD/CHF - Earns a ‘-4’ Rating, or a ‘Sell’ Signal

Between fresh numbers for US PPI and more tomorrow, there is a good chance that forex and equities traders could encounter increased volatility across financial markets. First, at 8:30 am ET on Friday, tomorrow morning, the United States Bureau of Labor Statistics is scheduled to release the latest increases for the Producer Price Index (PPI; measures changes in the prices of goods and services sold by producers) and Core PPI (which excludes volatile food and energy prices), both month-over-month. These measurements of inflation are both currently forecast to have risen by 0.2% in the month of November; if the real figures fall short of these expectations, this would be bearish news for USD and bullish news for the US stock market, whereas the inverse would be true if the real PPI numbers exceed these expectations.

Second, at 10 am ET tomorrow, the University of Michigan in the US is going to publish the Preliminary release of their Index of Consumer Sentiment report. Released monthly, the index is based on data regarding the economic confidence of consumers gathered via survey; it acts as an indicator for economic optimism or pessimism, which can have big implications for financial markets. With the index anticipated to hit 56.9 this month, a larger number would signal more consumer optimism, which would be bullish news for USD and bearish for stocks. However, if the report fails to hit these forecasts, this could likely be bearish news for USD and bullish for the stock market. This is because, as with the PPI reports, hotter-than-expected growth and demand could cause the Federal Reserve to lean further into monetary tightening and hawkishness, which would fly in the face of investor hopes as reflected in the recent months’ stock market rally. Regardless of bullish or bearish biases, traders would be wise to keep an eye on these releases, as they may have a significant impact on price action tomorrow.

What Assets to Watch

While the EdgeFinder does not currently view the US Dollar in a particularly favorable light, it has generated one such bullish signal for a major pair. That pair is listed below, along with two assets worth watching for potential trade setups if tomorrow’s news is bearish for USD. They are all listed below with their respective ratings, signals/biases, and corresponding charts.

1) USD/CAD - Earns a ‘5’ Rating, or a ‘Buy’ Signal

2) US30 (Dow Jones) - Earns a ‘4’ Rating, or a ‘Buy’ Signal

3) XAU/USD (Gold) - Earns a ‘2’ Rating, or a ‘Neutral’ Signal

As we await significant economic news releases over the coming days (such as Australia’s quarter-over-quarter GDP growth tonight at 7:30 pm ET, an interest rate hike and corresponding statement from the Bank of Canada on Wednesday at 10 am ET, and the latest Producer Price Index numbers for the US on Friday at 8:30 am ET), it is worthwhile to consider which pairs the A1 Edgefinder already suggests monitoring. With this in mind, here are the EdgeFinder’s three potential best pairs to sell this week, listed below with their respective ratings, signals/biases, and corresponding charts. Due to the New Zealand Dollar’s holistic strength as of late, they are currently all NZD pairs. Additional comments on fundamentals and technical analysis will also be provided.

1) GBP/NZD - Earns a ‘-9’ Rating, or a ‘Strong Sell’ Signal

2) AUD/NZD - Earns a ‘-9’ Rating, or a ‘Strong Sell’ Signal

3) EUR/NZD - Earns a ‘-6’ Rating, or a ‘Strong Sell’ Signal

This morning’s economic news pertaining to the United States has been rather complicated. Because of this, we would like to issue a word of caution: bizarre US labor data like this can have odd effects on price action for major pairs. On one hand, Non-Farm Employment Change (NFP, for Non-Farm Payrolls; a key gauge of private sector labor market activity) estimates for November came in far from strong. Released at 8:15 am ET by Automatic Data Processing, Inc., a meager 127,000 jobs were projected to have been added to the US economy over the latest month, a far cry from the 196,000 that had been forecast. This implies a cooling labor market, which is bearish for USD.

On the other hand, however, the latest findings in the Bureau of Labor Statistics JOLTS jobs report, published this morning at 10 am ET, has seemingly contradictory implications: an impressive 10.33 million job openings remain in the US, still almost double the number of unemployed individuals looking for work. Coupled with better-than-expected quarter-over-quarter real GDP growth, with the latest numbers clocking in at a 2.9% expansion this morning, and a smaller decline in homes sales than anticipated, this news paints a different picture of the US labor market and economy, one that is still red hot. This is quite bullish news for USD.

What to Make of This?

While it does appear that more reports are signaling USD bullishness than bearishness, we can also wait for further confirmation about US economic strength over the next few days. For example, tomorrow morning the latest changes in the US Core PCE Price Index month-over-month will be made public; this is a key fundamental indicator for those trading USD, as it is the Fed’s preferred measure of inflation. Likewise, Friday morning will be a pivotal day in the financial markets, since the official new NFP numbers, wage growth data month-over-month, and new US unemployment rate will be published too, all at 8:30 am ET. Between all these crucial updates on fundamentals, traders will have much to chew on, far more than just today’s confusing data.

3 Potential Pairs to Buy

According to the EdgeFinder, A1 Trading’s market scanner, EUR/USD and USD/CAD remain the optimal pairs to monitor right now for opportunities to go long on USD. Because we just explored their respective charts in Monday’s article, let’s take this time to examine the EdgeFinder’s highest rated pairs to buy, which all happen to be NZD pairs. A strong currency in its own right, the New Zealand Dollar is well worth focusing on as we await further USD developments. Without further ado, here are the three pairs that rank highest on the EdgeFinder’s score summary chart, along with their respective ratings, biases, and corresponding charts.

1) NZD/CAD – Receives a ‘6’ Rating, or a ‘Strong Buy’ Signal

2) NZD/USD – Receives a ‘5’ Rating, or a ‘Buy’ Signal

3) NZD/JPY – Receives a ‘5’ Rating, or a ‘Buy’ Signal

Near official as of last week, the financial world has had some stunning news to grapple with. The Federal Open Market Committee (FOMC), the policy-making body within America's Federal Reserve, revealed in their latest set of meeting minutes that they are leaning towards slowing the pace of interest rate hikes. A huge step away from recent hawkishness, one key motivating factor for this blossoming consensus is the FOMC's desire for caution, and their intent to monitor the US economy's response to this year's sequence of rate hikes. This desire for hesitancy is warranted since the effects of rate hikes typically lag, with higher interest rates for businesses and consumers often taking a while to slow demand, reducing inflation and economic activity over time. The US Dollar Index (DXY) has continued sinking lower on these shocking new USD fundamentals, testing support at the 106 level as depicted on TradingView's chart above.

However, these new developments are complicated by other crucial variables. First, the FOMC has also made it clear that they now expect the federal funds rate to peak at a level higher than their earlier expectations had reflected. In other words, in spite of near-future rate hikes likely shrinking in size, they will also likely be more frequent than previously intended, with US interest rates currently anticipated to climb higher than the FOMC had planned several months ago. This factor is quite bullish for USD at face value, though how financial markets will digest it over the coming months is difficult to say.

Second, the DXY faces peril in the form of a fresh slate of US economic data this week, including: the Conference Board’s Consumer Confidence report at 10 am ET on Tuesday tomorrow; Non-Farm Payroll (NFP) estimates, JOLTS Job Openings, and a speech from Chair Powell on Wednesday; month-over-month Core PCE Price Index numbers on Thursday at 8:30 am ET; and wage growth, NFP changes, and the new US unemployment rate on Friday at 8:30 am ET. As this flurry of new data becomes available to traders around the world, many major pair trade setups will likely emerge for both USD bulls and bears.

Three Pairs to Watch

For those who remain bullish on USD, two of the following currency pairs are viewed favorably by the EdgeFinder, and the other, USD/JPY, earns a spot on this list nonetheless due to its past potential. They are itemized below with their respective ratings, signals/biases, and corresponding charts. They could potentially yield some great opportunities for going long on USD this week, depending on how the markets react to the contents of these new batches of economic data.

1) USD/CAD - Receives a ‘4’ Rating, or a ‘Buy’ Signal

2) EUR/USD - Receives a ‘-4’ Rating, or a ‘Sell’ Signal

3) USD/JPY - Receives a ‘1’ Rating, or a ‘Neutral’ Signal (Personal Long Bias)

As many of you already know, the EdgeFinder, A1 Trading’s market scanner software, can be incredibly helpful for discerning which securities are especially worth watching for potential trade setups. Whether you are planning on buying or selling a currency pair, commodity, bond, or more, EdgeFinder analysis is so robust that its ratings and biases can be a go-to supplement for traders. However, one feature of the EdgeFinder’s that is little mentioned, yet quite meaningful, is its generation of ‘0’ ratings and ‘Neutral’ biases. Most days, there are a small handful of pairs or securities that earn these reviews; rather than being irrelevant, these ratings can be quite convenient to keep in mind, as they can alert traders to risks in terms of lack of signals. With that in mind, here are 4 pairs to be wary of next week, as they currently earn such ‘0’ ratings, indicating that an extra measure of caution could be helpful.

1) GBP/CAD - Earns a ‘0’ Rating, or a ‘Neutral’ Signal