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
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
2) EUR/JPY - Receives a ‘6’ Rating, or a ‘Strong Buy’ Signal
3) NZD/JPY - Receives a ‘5’ Rating, or a ‘Buy’ 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
Fresh on the heels of today’s surprisingly low inflation data for the United States, all eyes will be on the big Fed decision ahead. Tomorrow afternoon at 2 pm ET, the Federal Open Market Committee (FOMC; the policy-making body within the Federal Reserve) will reveal their latest increase in the Federal Funds Rate, along with a corresponding statement and a new set of economic projections for the next two years (including interest rate forecasts). Following this, at 2:30 pm ET Fed Chair Jerome Powell will speak at the FOMC press conference, where he will answer questions regarding monetary policy strategy, economic outlook, and more. All these events are likely to cause a great deal of volatility across financial markets, especially as equities investors eagerly await a slower rate hike pace.
With a 50 basis point rate hike forecast for tomorrow, instead of another brutal 75 basis point hike like those that have been implemented consecutively the past several times, traders and analysts will be on the lookout for more signals regarding a further pivot away from hawkishness. They may feel further emboldened in this search in light of the latest CPI data released this morning, showcasing another month of slowing inflation, bolstering stock market optimism and reducing US Dollar bullishness. However, whether evidence for this narrative continues to build has yet to be seen: there is still the chance that the FOMC could further upwardly revise interest rate forecasts while slowing the pace, which would not be quite as bullish for stocks and bearish for USD as it may seem.
Three Indices to Watch
In yesterday’s article we discussed three pairs to monitor for those who are bullish on USD; they remain worth checking on for potential trade setups this week. Today, however, let’s examine three stock market indices worth watching for those who may be anticipating a fundamental catalyst related to potential Fed dovishness tomorrow. Though two receive neutral signals, the EdgeFinder currently offers positive ratings for all three listed below, as can be seen among their respective ratings, signals/biases, and corresponding charts.
1) US30 (Dow Jones) - Earns a ‘3’ Rating, or a ‘Buy’ Signal
2) SPX500 (S&P 500) - Earns a ‘2’ Rating, or a ‘Neutral’ Signal
3) NAS100 (Nasdaq-100) - Earns a ‘2’ Rating, or a ‘Neutral’ 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