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Best Currency to Buy?

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

Best Currency to Buy?
Best Currency to Buy?

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

Best Currency to Buy?
Best Currency to Buy?

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

Best Currency to Buy?
Best Currency to Buy?
3 Pairs to Avoid (For Now)

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

3 Pairs to Avoid (For Now)
Both currencies display some substantial degree of weakness relative to other currencies' host countries, such as Australia's unaggressive central bank, or the Canadian Dollar's relationship with (recently falling) oil prices as a 'commodity currency'.

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

3 Pairs to Avoid (For Now)
Both currencies display some substantial degree of strength relative to other currencies' host countries, with both boasting solid GDP growth and fairly hawkish central banks.

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

3 Pairs to Avoid (For Now)
As with AUD/CAD, both currencies here suffer from some substantial degree of weakness relative to other currencies' host countries, such as the UK's looming stagflation problem (recession combined with high inflation), and institutional bearishness for both the Pound and Canadian Dollar.
How to Trade JPY This Week

Today and tomorrow are primed to be significant for those trading the Japanese Yen, as well as Japanese bonds. The Bank of Japan (BoJ) is tentatively scheduled to release a Monetary Policy Statement at some point today along with any interest rate adjustments, with a press conference to follow tomorrow. Buying pressure for JPY has been gaining steam over the past few months as traders bet on the BoJ finally pivoting away from extreme dovishness as annual inflation in Japan hits a historic 3.7%. However, while the BoJ seems likely to change course at some point, there have been few explicit signals to suggest that a newfound hawkishness could be just around the corner; for context, Japan’s economy has wrestled with a chronic deflation problem for decades. While the BoJ’s Governor, Haruhiko Kuroda, has a planned retirement in April of 2023, what sort of tone his successor will set still remains a little way off. As retail traders contemplate how to trade JPY this week, it may be wise to focus more on fundamentals over speculation.

Three Pairs to Watch

The EdgeFinder is currently quite bearish on JPY ahead of the upcoming monetary policy news. For those interested in looking for potential trade setups for selling the Yen, the following pairs are rated favorably for JPY bears. They are listed below with their respective ratings, signals/biases, and corresponding charts.

1) CHF/JPY - Receives a ‘7’ Rating, or a ‘Strong Buy’ Signal

How to Trade JPY This Week
How to Trade JPY This Week

2) EUR/JPY - Receives a ‘6’ Rating, or a ‘Strong Buy’ Signal

How to Trade JPY This Week
How to Trade JPY This Week

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

How to Trade JPY This Week
How to Trade JPY This Week
5 Strongest Pairs to Trade

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

5 Strongest Pairs to Trade
USD beats CAD in every listed category besides inflation (although annual inflation in the US remains slightly higher than in Canada).
5 Strongest Pairs to Trade
This yearlong uptrend has been impressive, with a sustained breakout above key resistance.

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

5 Strongest Pairs to Trade
NZD beats CAD in every listed category besides inflation and interest rate divergence (although annual inflation in New Zealand remains higher than in Canada, and their benchmark interest rates are identical).
5 Strongest Pairs to Trade
The past few months have given way to incredible bullish momentum following October's reversal.

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

5 Strongest Pairs to Trade
EUR beats JPY in every listed category besides inflation and unemployment; interest rate divergence is especially significant in light of the EU's departure from ultraloose monetary policy, which contrasts sharply with Japan.
5 Strongest Pairs to Trade
This yearslong uptrend has reached highs not encountered since 2015.

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

5 Strongest Pairs to Trade
NZD continues to beat AUD in every listed category.
5 Strongest Pairs to Trade
The aggressive selloff continues following October's stunning breakout below trendline support.

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

5 Strongest Pairs to Trade
NZD continues to beat GBP in every listed category.
5 Strongest Pairs to Trade
Trendline resistance spanning over a decade continues to hold as key support is yet again retested.
Best Pairs to Sell This Week

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

Best Pairs to Sell This Week
NZD beats the Pound in every listed category, perhaps most notably in interest rate divergence, COT data, and GDP growth.
Best Pairs to Sell This Week
Trendline resistance is remarkable, spanning nearly two decades. Key support has been tested repeatedly since 2018, thus far to no avail.

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

Best Pairs to Sell This Week
NZD likewise beats the Aussie Dollar in every listed category, with the same strong points mentioned with GBP/NZD.
Best Pairs to Sell This Week
This past year's impressive uptrend has been disrupted by an aggressive breakout to the downside, aided by EMA resistance.

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

Best Pairs to Sell This Week
NZD beats the Euro in every listed category, except for both COT data and retail sentiment.
Best Pairs to Sell This Week
Trendline resistance appears compelling, though higher lows are also evident since April of this year.
Caution: Bizarre US Labor Data

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

Caution: Bizarre US Labor Data
Caution: Bizarre US Labor Data

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

Caution: Bizarre US Labor Data
Caution: Bizarre US Labor Data

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

Caution: Bizarre US Labor Data
Caution: Bizarre US Labor Data
Kiwi Dollar Spike Tomorrow

While today is relatively uneventful in terms of major economic news around the world, this will not be the case for long. There is a chance that the forex market could witness a Kiwi Dollar spike tomorrow due to the Reserve Bank of New Zealand (RBNZ) announcing their latest interest rate hike at 8 pm ET. With market forecasts currently expecting the Official Cash Rate to increase by 75 basis points, hitting 4.25% (surpassing the United States’ Federal Funds Rate), all eyes will be on NZD to see if it retains its bullish momentum. With the RBNZ set to issue a Monetary Policy Statement in conjunction with their rate hike, and a press conference to follow an hour later at 9 pm ET, how the markets interpret the RBNZ’s commentary will help decide the fate of the New Zealand Dollar.

Three Pairs to Watch

The EdgeFinder, A1 Trading’s market scanner, currently holds NZD in high esteem: all the pairs with the strongest buy and sell signals are NZD pairs, with biases that corroborate Kiwi Dollar bullishness. Three of these pairs are listed below with their respective ratings, biases, and corresponding charts.

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

Kiwi Dollar Spike Tomorrow
Every line item in the Score Summary list favors NZD over GBP, factoring in fundamental, technical, and sentiment analysis.
Kiwi Dollar Spike Tomorrow
This monumental downtrend is years in the making.

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

Kiwi Dollar Spike Tomorrow
Every line item in the Score Summary list favors NZD over AUD, factoring in fundamental, technical, and sentiment analysis.
Kiwi Dollar Spike Tomorrow
October's huge breakout to the downside of trendline support has given way to an aggressive new downtrend.

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

Kiwi Dollar Spike Tomorrow
Although NZD beats JPY in a number of key categories, perhaps the most crucial is interest rate divergence, as the RBNZ and the Bank of Japan engage in starkly different projects in terms of monetary policy.
Kiwi Dollar Spike Tomorrow
This uptrend has held strong for over two years now.
UK CPI Data Mislead Markets Today

This morning at 2 am Eastern Time, the Office for National Statistics reported the latest monthly round of Consumer Price Index (CPI) and Core CPI increases within the United Kingdom’s economy. Annual CPI, which had been forecasted to hit 10.7%, instead jumped by an astonishing 11.1%, making for another multidecade high; annual Core CPI also surpassed expectations, reaching 6.5% instead of the anticipated 6.4%. Because higher-than-expected inflation numbers tend to prompt central banks to raise interest rates to cool their respective economy in response, the Pound rose on the news accordingly, with traders welcoming the bullish indicator. However, it seems quite plausible that the UK CPI data mislead markets today, because these high figures are not due to traditional economic overheating.

A more fitting target for the blame is the slew of supply side issues stemming from the wartime energy crisis and clunky access to import commodities, driving up food and gas prices. This is why Core CPI in the UK has thus far only increased by a little over half that of CPI, and why the UK’s GDP is contracting, not expanding. These structural issues cannot be resolved merely by a central bank restricting demand vis-à-vis interest rate hikes; rather, either some combination of domestic production and trade must be reconfigured, or many of these tragic conditions must simply be endured, even in the form of stagflation. Whatever comes to pass, this particular kind of high inflation is ominous, and may perhaps be more appropriately filed as bearish for GBP upon a closer look.

Two Potential Pairs to Sell

For those who are looking for opportunities to short the Pound, the following two pairs are viewed favorably for GBP bears by the EdgeFinder, A1 Trading’s handy market scanner. They are listed below with their respective ratings, signals/biases, and corresponding charts. GBP/NZD is perhaps especially worth watching, as the Kiwi Dollar displays impressive fundamentals.

1) GBP/NZD (Earns a Score of -8, or a ‘Strong Sell’ Signal)

UK CPI Data Mislead Markets Today
UK CPI Data Mislead Markets Today

2) GBP/CHF (Earns a Score of -3, or a ‘Sell’ Signal)

UK CPI Data Mislead Markets Today
UK CPI Data Mislead Markets Today
3 Strongest Pairs to Buy

As we wait for major economic news releases this week (such as monetary policy meeting minutes from the Reserve Bank of Australia tonight at 7:30 pm ET, United States Producer Price Index numbers tomorrow at 8:30 am ET, and Consumer Price Index updates from the UK on Wednesday at 2 am ET), it can be helpful to consider what pairs the Edgefinder already signals to be particularly worth watching. With this in mind, here are the EdgeFinder’s current 3 strongest pairs to buy this week, listed below with their respective ratings, signals/biases, and corresponding charts. Additional comments on fundamentals and technical analysis will also be provided.

1) CHF/JPY (Receives a 5, or ‘Buy’ Signal)

3 Strongest Pairs to Buy
Despite the similarities between these two countries' economies in terms of stability and hot labor markets, the Swiss National Bank's willingness to raise interest rates is decidedly bullish for CHF, while the Bank of Japan instead continues to keep its monetary policy 'ultraloose'.
3 Strongest Pairs to Buy
While the uptrend has paused, strong support has been found around the 146 level.

2) USD/CAD (Receives a 5, or ‘Buy’ Signal)

3 Strongest Pairs to Buy
The US economy notably outpaces Canada's in terms of labor market activity, economic growth, inflation, and central bank aggression.
3 Strongest Pairs to Buy
Despite the steep fall over the past month, price action is encountering a key support zone; Keltner Channel walls suggest oversold conditions.

3) NZD/CAD (Receives a 4, or ‘Buy’ Signal)

3 Strongest Pairs to Buy
Despite the Reserve Bank of New Zealand lagging behind the Bank of Canada regarding interest rate divergence, this may not last long, considering New Zealand is currently leading in terms of holistic overheating.
3 Strongest Pairs
It appears a significant breakout to the upside may have just occurred within the past week, disrupting a year-long downtrend.
This Strong Currency May Surprise You

One of the main reasons why the EdgeFinder, A1 Trading’s market scanner, is so helpful is because of its ability to convey nuance when presenting analysis. For example, one currency pair may have strong bullish fundamentals while institutional sentiment somehow remains quite bearish, and the EdgeFinder is able to present this data concomitantly. This makes it even more compelling when the market scanner issues ‘strong’ buy or sell signals, indicating that a significant combination of fundamental, sentiment, and technical analysis have aligned for a pair. As of today, two new minor pairs have earned ‘strong sell’ signals; they share the same quote currency, and this strong currency may surprise you. It is the Kiwi Dollar, which has only recently been gaining bullish steam in the forex market. Boasting hot labor markets, strong GDP growth, high inflation, and a relatively hawkish central bank to match, New Zealand’s economy makes NZD seem quite promising. Institutional traders are only just now beginning to affirm this, with over 10% more of them going long on NZD than in the previous week.

Two Potential Pairs to Sell

The following two pairs are rated extremely favorably for bears, and for those planning to go long on NZD. They are listed below with their respective EdgeFinder ratings, signals/biases, and corresponding charts.

1) AUD/NZD (Earns a -9, or ‘Strong Sell’ Signal)

This Strong Currency May Surprise You
NZD currently beats AUD in every listed category.
This Strong Currency May Surprise You
October saw a steep breakout beneath key trendline support.

2) GBP/NZD (Earns a -9, or ‘Strong Sell’ Signal)

This Strong Currency May Surprise You
NZD currently beats GBP in every listed category.
This Strong Currency May Surprise You
This downtrend spans nearly two decades, as shown in the 1-Month timeframe above.
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