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How to Trade a Weakening Dollar

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Deborah Harrison

t U.S. dollar just can't seem to stop falling. Here's how to trade the trend.

Dollar weakness is not a new phenomenon. In the past ten years, the dollar index has actually declined about 31%, according to Andrew Busch, global currency and public policy strategist for BMO Capital.

But in some cases, the falloff been much faster: in just five years, the dollar has dropped 37% against the Brazilian real, and just in the last year it has dropped 30% against the Australian dollar, he told CNBC's Melissa Lee.

"It's really a question of the speed," said Busch, who is also a contributor to CNBC.com.

So what do you do? Simple - or at least it sounds that way: "Figure out what the trend is and follow it," Busch said. So he suggests selling the dollar - of course - against a currency backed by tight-money policy, plenty of oil to export, and decent fiscal conditions: the Norwegian krone. Busch recommends selling the dollar against the krone with a stop loss of 5.6425 and a target of 5.050.

Todd Gordon, co-head of research and trading at Aspen Trading Group, agreed, noting that he actually sold the dollar against the krone early on Friday. "It's important to be short the dollar against those stronger, high yielding commodity currencies," he said.

You can watch the discussion right here.

CURRENCY FUTURES

Tune In: CNBC's "Money in Motion Currency Trading" airs on Fridays at 5:30pm.

"Money in Motion Currency Trading" repeats on Saturdays at 7pm.

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