The past week was a rough one for commodities, and oil, for one, had its biggest dollar drop in at least 30 years. Here's how to use currencies to trade oil now.
Plenty of factors were working against oil, according to Rebecca Patterson, chief markets strategist for J.P. Morgan Asset Management, Institutional. Worries about a soft business climate and other big-picture concerns hurt all commodities, and there were also hints that OPEC might raise oil supplies at its June 2 meeting.
But there is a seasonal positive effect looming for oil prices, Patterson told CNBC's Melissa Lee.
"Hurricane season starts June 1. The summer driving season is starting basically now. And those demand and supply drivers help push oil up," Patterson said, noting that in two-thirds of the last twenty years, seasonal factors have pushed up oil prices around this time.
There are many oil-sensitive currencies, but Patterson's current favorite is the Norwegian krone against the British pound . Norway is a big oil exporter, of course, and Patterson expects the central bank to raise interest rates by 25 basis points on Thursday, providing added lift. She would buy the Norwegian krone and sell the British pound at 9.100, with a target of 8.800 and a stop loss of 9.200.
The British currency could also move up on an inflation report this week, Patterson said. But the pound is less risky than the Norwegian krone, she explained, and "We don't know what's going to happen with risk appetite right now." If investors become more risk averse and start buying dollars, that will hurt the krone - and also sterling, she said. "I'm taking risk appetite out of the picture a little and making this a pure play on Norway."