How to Trade Decision Time for Greece
A deal for aid to Greece has to be stitched together in the next few days, strategists say.
Here's how to trade now that it's decision time.
Germany is making concessions, Greeks are protesting in the streets, and currency markets have been choppy for days.
Sounds like the perfect time for a euro-dollar trade - and Keith McCullough, chief executive of Hedgeye Risk Management, has one in mind.
"You have to be playing dollar versus euro, because that's the big game to be played," McCullough told CNBC's Melissa Lee. He has been long the dollar so far in June, he says, but sold it today because he expects a deal in the next couple of days on aid for Greece. "At that point, I think you can re-short the euro and get back into the long dollar trade."
McCullough recommends selling the euro against the dollar when it hits $1.44 and targeting a drop to $1.36. "You have two big catalysts," he says - the end of QE2 and an agreement on a higher U.S. debt ceiling. McCullough also expects the European Central Bank to actually cut interest rates in the third quarter, contrary to consensus forecasts. "The ECB has raised interest rates because they are fearful of inflation," McCullough says. His firm is expecting a deflation of inflation - already evident in commodity prices, he says - and "that gives the Europeans cover to raise interest rates."
You can watch the whole discussion in the video clip.
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