October 12, 2022

Top 4 Minor Pairs to Trade

Michael J. Donoghue
Top 4 Minor Pairs to Trade

As many traders and analysts grapple with today’s big economic news (namely, the UK’s disappointing 0.3% month-over-month contraction in GDP, the US’ surprise 0.4% jump in month-over-month PPI, and the FOMC meeting minutes set to release at 2 pm), many are similarly preparing for tomorrow's new round of CPI data in the US. Scheduled for reporting by the Bureau of Labor Statistics at 8:30 am on Thursday, October 13th, the public will learn how prices for US consumers changed in September. Because CPI is a proxy for inflation, this news will likely cause a great deal of volatility across financial markets, potentially offering another fundamental catalyst for USD bulls if September’s hot jump in PPI is any indication. While major pairs like EUR/USD, GBP/USD, and USD/JPY are thus still ripe for trading, it can also be worthwhile to explore some less frequently traded pairs as well. Here are the A1 EdgeFinder’s top 4 minor pairs to trade, along with some additional analysis for each.

1) CHF/JPY (Earns a 3, or ‘Buy’ Rating)

Top 4 Minor Pairs to Trade
Fundamentals still favor CHF and may continue to do so until the Bank of Japan finally raises interest rates.
Top 4 Minor Pairs to Trade
Trendline support appears to be holding steady.

2) EUR/CHF (Earns a 3, or ‘Buy’ Rating)

Top 4 Minor Pairs to Trade
Fundamentals are mixed due to Europe's energy crisis and unemployment, though the Swiss National Bank lags behind the ECB in hawkishness.
Top 4 Minor Pairs to Trade
It appears a breakout to the upside may have occurred at the start of October.

3) AUD/JPY (Earns a -3, or ‘Sell’ Rating)

Top 4 Minor Pairs to Trade
Fundamentals are mixed: Japan's economy is performing better, but inflation and mild rate hikes nominally favor AUD.
Top 4 Minor Pairs to Trade
A month-long downtrend could potentially see a breakout below the depicted support zone.

4) AUD/NZD (Earns a -3, or ‘Sell’ Rating)

Top 4 Minor Pairs to Trade
New Zealand's economy appears to be significantly stronger than Australia's, though inflation is beginning to favor AUD.
Top 4 Minor Pairs to Trade
This uptrend does appear to be strong; we will have to watch and see if NZD fundamentals are enough to cause a breakout to the downside.

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