So how do you use currencies to trade this?
Andrew Busch, global currency and public policy strategist for BMO Capital, went to the history books and found a pattern he wants to use.
Apparently, after the last three Fed meetings, spreads between US and Australian two-year interest rates widened, and the Australian dollar rallied. So this time around, Busch recommends buying the Australian dollar and selling the greenback on the day of the FOMC meeting. Using current spot levels, that would be an entry point right around $1.06. Busch suggests a stop at $1.05 and a target of $1.09.
You can watch the whole discussion in the video clip here in this post.
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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.